VietNamNet Bridge – Banks all plan to raise their chartered capital to become stronger and more competitive. However, their plans have been delayed many times because of the lackluster stock market.
Only several small banks still do not have enough--three trillion dong in chartered capital as required by the Decree No 141, for bank organization and operation management.
Gia Dinh Bank is one of the banks. It has offered to sell shares to the public in the plan to increase the chartered capital from two trillion dong to three trillion dong by December 31, 2011.
Under the plan, Gia Dinh Bank will issue 100 million shares worth one trillion dong (the face value of the shares is 10,000 dong) to existing shareholders. As for Gia Dinh and some other banks, it will be not too difficult to issue shares, because shareholders understand well that the bank must raise the chartered capital, or it will have to shut down.
Meanwhile, it proves to be more difficult for small and medium banks which have the chartered capital of three trillion dong and more, to raise more funds in accordance with the plans approved by the shareholders’ meeting.
Saigon Bank is a typical example. The plan to increase the chartered capital to 3500 billion dong in 2011 got the nod from the shareholders at the shareholders’ meeting held earlier this year. However, until now, when the fourth quarter is nearing, Saigon Bank still cannot implement the plan on issuing shares to increase its chartered capital to the targeted level.
Nam A also plans to increase its chartered capital to 3700 billion dong by the end of the year. However, to date, no new move towards the share issuance has been made by the bank.
Most recently, the representative from HD Bank revealed that the bank is making hectic preparations to raise the chartered capital from 3000 billion dong to 5400 billion dong this year. A part of the shares to be additionally issued would be sold to strategic partners, both foreign and domestic.
However, the bank has been put under a hard pressure when it has to call for more capital from existing shareholders, partners. However, it would also be a headache for the bank’s board of management to think about how to use the huge capital in the most effective way, to ensure the optimum benefits for shareholders.
Analysts all believe that the banks are very likely to delay the capital increase plans until the next year. Banks may understand that the massive share issuances would lead to the oversupply – a very bad thing for the current lackluster stock market.
Nevertheless, some small banks still keep optimistic with their capital increase plans. Hoang Van Toan, Chair of TrustBank, said that right after getting the nod from the State Bank of Vietnam on the plan to raise the capital from 3 trillion dong to 5 trillion dong, TrustBank has applied for share issuance to the State Securities Commission (SSC).
“If we can get the approval from SSC soon, we may issue shares to increase capital in September,” Toan said.
Capital increase has been encouraged by the State Bank of Vietnam, which believes that Vietnamese banks need to become bigger and stronger to be more competitive in the integration period. A commercial bank now must have the minimum chartered capital of three trillion dong.
Even big banks also want to become bigger. VietinBank, has got the approval from the State Bank on its plan to increase the chartered capital from 16,858 billion dong to 20,230 billion dong. Meanwhile, Vietcombank will raise the chartered capital from 17,587 billion dong to 19,698 billion dong, and Eximbank has got the nod to raise the capital to 12.3 trillion dong.