Banks must make moves for capital increase and listing

22-Jan-2015 Intellasia | Dau Tu Chung Khoan | 6:00 AM Print This Post

The State Bank of Vietnam (SBV) approved four banks to increase their charter capital over the last month and this number will continue to increase. After years of delaying, banks must make a move or they will obviously be merged.

National Citizen Commercial Joint Stock Bank (NCB) is a typical case. Planned to raise capital from 2010, when the shares were listed on the stock exchange under the old name Navibank (code NVB), after four years, NCB’s charter capital is currently still at the minimum regulated level of three trillion dong. The bank recently considers to apply for delisting, as its stock price continued to fall since being listed. It is difficult for NCB to attract investors in order to focus on restructuring.

Vietnam Asia Commercial Joint Stock Bank (VietA Bank) failed to increase charter capital to 3,500 in 2013, while it planned to raise capital to four trillion dong in 2014 and five trillion dong in 2015, under the shareholders meeting resolution. The bank also targeted to complete restructuring under the scheme approved by SBV. In a move to restructure ownership capital, VietA Bank announced to divest capital from shares that it has high ownership, including 3.99 percent shares of Dat Xanh Real Estate Service and Construction Joint Stock Company (code: DXG), 11 percent shares of Dam Sen Water Park Corporation (DSN) and 3.91 percent shares of Truong Thanh Furniture Corporation (TTF). This action of VietA Bank is to follow the new rule on ownership ceiling under Circular 36 of SBV.

Although Dong A Commercial Join Stock Bank (DongA Bank) successfully raised capital to five trillion dong in 2012, it had to cancel the plan to increase capital to six trillion dong in early 2014 though 70 percent of the plan was completed, since shareholders were unable to make full payment. The bank is said to be merged with another bank, though it still pursues raising capital.

There are nearly ten banks listed on the two stock exchanges, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB), Vietnam Joint Stock Commercial Bank for Industry and Trade (CTG), Vietnam Commercial Joint Stock Export Import Bank (code: EIB), Asia Commercial Joint Stock Bank (ACB), Agribank Securities Joint Stock Corporation (AGR), Saigon Thuong Tin Commercial Joint Stock Bank (STB), Saigon Hanoi Commercial Joint Stock Bank (SHB), Millitary Commercial Joint Stock Bank (MB), Joint Stock Commercial Bank For Investment and Development of Vietnam. However, SBV requested all banks that are mobilising capital from the public to be listed. Thus, about 20 banks should enforce this requirement, probably in 2015.

Listing is not really beneficial to bank owners, as it affects shareholders’ benefits and capital raising plan because bank shares have not yet regained attractiveness. Nevertheless, it is good for the entire banking system since it requires better transparency and limits the cross ownership.

DongA Bank is in this situation. When the market was still favourable, the bank’s board of directors once prioritised the plan to list shares on the stock market in order to have transparent information and create attractiveness to the bank shares. However, economic crisis occurred and the bank lost its interest in listing shares. The plan for listing was postponed indefinitely.

However, some banks are making active moves. Nam A Commercial Joint Stock Bank (NamA Bank) was lately approved to increase its capital from three trillion dong to 3.7 to four trillion dong. The bank also plans to be listed on the stock exchange in June 2015 at the latest. Tran Ngoc Tam, deputy general director believed that listing will help the bank to operate more transparently, increase stock liquidity, create investment opportunities and raise shareholders’ dividend.

Meanwhile, Orient Commercial Joint Stock Bank (OCB) and Saigon Commercial Joint Stock Bank (SCB) are implementing capital raising schemes which were approved recently. Specifically, SCB expects to add two trillion dong, bringing its charter capital to 14.294 trillion dong. To carry out the scheme, the bank will launch private offering of 200 million shares. OCB, in the first phase of the scheme, only issues 31.3 million shares, issuance rate is 10 percent of undistributed profit after tax.

Although planned to be listed several years ago, Hochiminh city Development Joint Stock Commercial Bank (HD Bank) still waits for the recovery of the stock market. HD bank successfully merged with DaiA Bank and acquired Societe general Viet Finance Company Ltd (SGVF). It is negotiating to sell a maximum of 30 percent of shares to foreign investors from Japan and Europe, in order to improve its competitiveness and capacity before being listed.

According to experts, SBV is making decisive actions, which are most recently regulated in Circular 36 and in the statement on mandatory mergers and acquisitions. Capital raising and share listing are the solutions given. This means banks should really make serious moves.

 


Category: Finance, Vietnam

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