Prospects to remove difficulties of capital-raise for four biggest banks

25-May-2019 Intellasia | BizLIVE | 6:00 AM Print This Post

According to BizLIVE’s understanding, the authorities have basically agreed to remove difficulties for state-owned commercial banks in increasing charter capital.

In particular, the component of increasing capital in each member continues to wait for the authorities to decide in the near future.

In the recent report to the National Assembly, the State Bank of Vietnam (SBV) said that the strengthening of financial capacity through increasing the charter capital of commercial banks with state capital to ensure the leading role of these banks. In the financial and monetary market, there have been many difficulties in the past time.

The amount of capital needed to invest and supplement state-owned commercial banks is quite large to ensure the minimum capital adequacy ratio according to Basel II, while state resources can be used. It is also very limited to raise capital for these banks.

Therefore, SBV said that it was necessary to take appropriate measures, including retaining the bank’s profits or stock dividends to increase financial capacity for commercial banks with state capital.

Accordingly, SBV proposed the government and the prime minister to assign the Ministry of Finance to study and coordinate with the Ministry of Planning and Investment to research and remove legal problems. It also advised the government to submit to the National Assembly to consider, amend or issue a new resolution of the National Assembly in the direction of allowing the use of the state budget to increase charter capital for commercial banks with state capital (except zero dong commercial banks).

Previously, leaders of four biggest banks simultaneously spoke up; emphasising the need to raise capital was extremely urgent, suggesting mechanisms and solutions from management agencies.

At the annual general Meeting of Shareholders held in April last year, Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank) submitted to shareholders for approval of two options of dividing all 2018 dividends by shares at the rate of 8.03 percent (equivalent to 2.99 trillion dong) and leaving all profits (nearly 2.997 trillion dong) to increase charter capital.

Le Duc Tho, Chair of VietinBank emphasized at the meeting, the plan to increase the bank’s equity was a very urgent content, because only after the capital increase, the bank could meet the growth demand.

In Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Nghiem Xuan Thanh, Chair of the Board of directors also said that, despite having successfully completed the issuance of private shares to foreign investors in 2018, compared with the plan set out in the project restructuring and to meet the needs of sustainable development, the demand for increasing capital of the bank was still quite large.

Accordingly, Vietcombank also planned to increase its chartered capital by 49 percent within the next two years through the form of issuing shares to increase its share capital from equity and offering shares in the form of public offering. They are either offered separately.

For Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), despite the approval of the plan to increase charter capital from 34.187 to 40.22 trillion dong through private placement to KEB Hana Bank. However, at the recent Annual general Meeting of Shareholders, Phan Duc Tu, Chair of the Board of directors said that currently, there were still some expected technical and price barriers that had not met each other.


Category: Finance, Vietnam

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