The merger of Habubank (HBB) and Sai Gon-Ha Noi Bank (SHB) is reaching the second stage of a three-stage process. The deal, if carried out successfully, will become the first voluntary bank merger to take place this year.

In a decision last week, the State Bank of Viet Nam approved the merger in principle, and SHB is preparing to ask the State Securities Commission to approve an issue of additional shares.

"These are not bonus shares or treasury stocks, so there will be no changes in reference price or dilution," said SHB chairman Do Quang Hien.

The Ha Noi Stock Exchange had no plan to adjust the reference price of SHB shares, although the bank had not yet released its issuing plan, an exchange official told the publication Dau tu Chung khoan (Securities Investment) on condition of anonymity.

It was possible, he said, that the exchange would widen the trading margin for the stock so that investors could decide the price.

Under the plan being discussed, HBB shareholders will be able to exchange one HBB share for three quarters of a new SHB share. If SHB shares retain their current trading price of VND9,200 per share, that would result in HBB being traded at around 20 per cent below converted value. The expected result is that, after the merger, SHB shares would decline in value.

HBB shareholders will retain about 75 per cent of equity in the bank, worth around VND4 trillion (US$190.4 million), while the remaining 25 per cent will be bought up by SHB