Increasing chartered capital in accordance with the roadmap to meet the State Bank of Vietnam (SBV)'s regulation is causing heavy pressure on commercial joint stock bank system.
Stock market continued to edge slightly further in first trading session of this month, but fear of high inflation as well as the adjustment on basic interest rate still weighed heavily on investors. The cash flows into stock market therefore remained low, even though the banks have been allowed to apply negotiated lending rate mechanism and increase liquidity than before Tet holiday.
In the stock market, the bank share price seemed to be unchanged, even fell further, although 2009 profit of almost banks exceeded approved plans.
These are worries that banks are concerned, especially when the shareholders' meeting season is coming and director board has to submit the shareholders' meeting to pass chartered capital increase plan in 2010.
Unlike 2009, this year's chartered capital increase plan of banks is being built higher. Notably, with lenders with chartered capital scale of less than two trillion dong, they will have to find every way to raise chartered capital to three trillion dong within this year.
According to the central bank's regulation at Decree No 141/2006/ND-CP dated November 22, 2009, till the end of 2010, commercial banks must have minimum chartered capital of three trillion dong. Hence, issuing more shares to hike chartered capital is a part of banks plan in 2010.
For example, Western Bank's chartered capital is now one trillion dong, so to meet regulations of government and central bank, Nguyen Quoc Sy, Western Bank's deputy general director, said that in 2010, his bank will step by step increase chartered capital.
"Western Bank will scale up chartered capital to two trillion dong after finishing the listing plan on Hochiminh Stock Exchange (STC) in April. The raised capital source will be used to develop credit and serve business and production projects. Then, Western Bank will continue to hike chartered capital to three trillion dong before 2010 ends", said Sy. The mobilised chartered capital will be use to enhance the bank's financial capacity, invest in human resource, technology, infrastructure and develop new services and products.
Similarly, Dai A Commercial Joint Stock Bank (DaiABank)'s current chartered capital is one trillion dong and according to the plan, till the end of this year, DaiABank will hike the figure to three trillion dong to meet the regulation.
Talking with Dau Tu (Investment) newspaper, Tran Van Vinh, Ocean Commercial Joint Stock Bank (Ocean Bank-OCB)'s general director, said that his bank's chartered capital increase plan from two trillion dong to three trillion dong within this year is being considered by the bank's director board to submit to the annual shareholders' meeting that will be held on March 30.
A series of other banks like Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank) (current chartered capital at one trillion dong) and HCM City Housing Development Commercial Joint Stock Bank (HDBank) (current chartered capital at 1.55 trillion dong) also fall the same situation.
As for big banks, increasing chartered capital is necessary to increase competitive capacity in the current rough fiscal market context.
Particularly, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank-STB) plans to raise chartered capital from the current of 6.7 trillion dong to 9.179 trillion dong via offering more shares to pay 15 percent dividend, issue 20 percent shares to the existing shareholders and 2 percent to the bank's key staff. The offering price is scheduled at 15,000 dong per share.
In addition, Sacombank also plans to upgrade its branches in Laos and Cambodia to become 100 percent Sacombank-invested banks during 2010-2012 and establish Sacombank Branch in China and Burma during 2010-2015.
However, chartered capital increase is causing heavy pressure on banks. For instance, Vietnam Export Import Commercial Joint Stock Bank (Eximbank) plans to adjust its current chartered capital of 8.8 trillion dong to higher level meanwhile the bank's profit goal in 2010 would be hard to be higher than 2009's figure of 1.5 trillion dong.
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