Big banks face challenges raising charter capital
VietNamNet Bridge - Raising charter capital is the biggest challenge in 2019 not only for small joint stock banks but also for big state-owned banks.


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The representatives of the ‘big four’ banks at a recent conference all talked about the need to increase charter capital.

Reports show that CAR (capital adequacy ratio) of state-owned banks are the lowest in the banking system, just slightly higher than the minimum level.

By the end of May 2018, the average CAR of state-owned banks was 9.39 percent. The figure is feared to decrease as the total assets of the banks soared in the final months of 2018. 

Meanwhile, the deadline for applying Basel II is near. Only Vietcombank has been recognized by the State Bank of Vietnam (SBV) as meeting Basel II.

Vietinbank needs to raise charter capital immediately. The problem is that there is no more room for investors, both Vietnamese and foreign, since the state’s ownership ratio in the bank is 64.46 percent. 

Le Duc Tho, chair of VietinBank, admitted that the bank’s CAR is nearly the same as the minimum level. In the fourth quarter of 2018, the bank had to reduce outstanding loans to VND26.4 trillion, or it would have violated the regulation on a minimum CAR.

Vietinbank needs to raise charter capital immediately. The problem is that there is no more room for investors, both Vietnamese and foreign, since the state’s ownership ratio in the bank is 64.46 percent. 

The state ownership ratio is at the minimum level and the foreign ownership ratio is at the maximum level. If the State doesn’t pump more money into the bank, VietinBank will not be able to raise charter capital.

Increasing charter capital is also an urgent task for BIDV (Bank for Investment & Development of Vietnam) which has total assets of VND1,270 trillion, but charter capital is VND34.2 trillion, the lowest among the three equitized state-owned banks.

However, the State still holds 95.28 percent of the bank’s shares and BIDV can issue shares to foreign shareholders. The bank recently announced that it will sell 17.65 percent of charter capital to KEB Hana Bank from South Korea. 

The share price for KEB Hana Bank has not been fixed yet. BIDV Chair Phan Duc Tu has repeatedly urged the government to “remove obstacles soon” so that BIDV can sell shares to the foreign strategic investor.

Agribank has the lowest charter capital among the ‘big four’, VND30.77 trillion. The implementation of the plan to raise capital depends on the equitization process, which is encountering problems.

By the end of 2018, only Techcombank, VP Bank, Military Bank and ACB had fulfilled the capital increase plans set for the year.

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Mai Chi

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