Banks race to hike registered capital

Many small-scale commercial joint stock banks in Vietnam have just completed raising required authorised shareholder capital of at least VND3,000 billion, and more than a few of them have revealed new plans to raise the registered capital this year.

It is not only small commercial lenders that have to make efforts to increase their statutory minimum registered capital as stipulated by the State Bank of Vietnam, or the central bank, but larger ones are also disclosing plans to boost their capital this year.

Many small commercial banks have just completed raising the minimum required registered capital to VND3,000 billion and they actively prepare for new capital-raising plans which are scheduled to be done this year. Specifically, Housing Development Bank (HD Bank) will increase registered capital from VND3,000 billion to VND5,450 billion; Great Trust Joint Stock Commercial Bank (TrustBank) will hike its charter capital from VND3,000 billion to VND5,000 billion; and OceanBank will lift its capital from VND3,500 billion to VND5,000 billion.

With a capital-boosting plan ratified by the annual general meeting, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) will raise charter capital from VND9,179 billion to VND10,739 billion, expected to be completed by the end of this year. The Ho Chi Minh City-based lender will issue shares to existing shareholders (at a ratio of 100:15) and employees (100:2).

Mr Dang Van Thanh, President of Sacombank, said the recapitalisation plan is necessary for the bank to invest in fixed assets (VND320 billion), set up new units (VND800 billion), and supplement profit-taking business (VND440 billion).

On April 26, shareholders of Asia Commercial Bank (ACB) adopted a plan to hike chartered capital from more than VND9,376 billion to over VND11,252 billion. An ACB official said in the situation of stricter regulations on capital adequacy ratio and the rapidly changing business environment, to realise credit growth of 20 percent and earn VND4,100 billion net profit this year, the addition of about 20 percent of registered capital is necessary.

Similarly, Military Bank (MB) has also planned to increase its chartered capital from the current VND7,300 billion to VND10,000 billion by the end of this year. MB expects to make a pre-tax profit of VND2,900 billion this year.

Techcombank also sets high growth targets for this year. Notably, profit before tax is expected to rise 46 percent year on year to VND4,000 billion while total assets will reach VND182,000 billion. In 2011, the lender will open 60 branches and transaction offices. Thus, the bank is planning to increase its chartered capital to VND8,788 billion.

In fact, many commercial banks have registered capital of over VND10,000 billion, including Vietcombank, Vietinbank and Eximbank. But, these big banks have also entered the capital-raising race. Accordingly, the Vietnam Export – Import Commercial Joint Stock Bank (Eximbank) will lift its registered capital from VND10,560 billion to more than VND12,355 billion. Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has disclosed a plan to boost its charter capital from VND17,587 billion to more than VND24,622 billion.

These plans will supply a large volume of bank shares to the market, but demand for bank shares is unlikely to increase, but rather decline, because of the stock market slump and credit crunch policy adopted by the State Bank of Vietnam (SBV). – VCCI

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial