Vietnam's state-owned banks under capital increase pressure

Hanoi, Jan 31 (IANS): Vietnam's major state-owned banks are under pressure for a capital increase in 2023 as their charter capital is too low, with some unable to ensure the regulated minimum capital adequacy ratio (CAR), local media reported.

The low CAR will affect the credit supply of the state-owned banks, which will limit their support to businesses, especially when the economy is facing many potential risks, local newspaper Vietnam News reported on Monday.

Agribank, one of the four biggest state-owned banks in Vietnam, is unable to ensure the minimum CAR to get higher credit growth due to the low charter capital, which caused the bank to have a low credit growth in 2022, the newspaper reported, citing its Chairman Pham Duc An as saying.

Another big four, Vietcombank, plans to issue a maximum of nearly 2.77 billion shares to pay dividends to shareholders, and increase charter capital by nearly 27.7 trillion Vietnamese dong ($1.18 billion), local newspaper Baodautu (Investment) reported.

If successful, the bank's charter capital will increase by 58.4 per cent, from more than 47.3 trillion Vietnamese dong ($2 billion) to more than 75 trillion Vietnamese dong ($3.18 billion), it said as quoted by Xinhua news agency report.

As of October 2022, the CAR of Vietnam's state-owned banks was only 9.04 per cent, much lower than that of other regional countries, such as the Philippines (16.29 per cent), Singapore (17.2 per cent), Malaysia (18.3 per cent), Thailand (19.3 per cent) and Indonesia (23.3 per cent), according to Vietnam News.

Moreover, many countries in the region have applied Basel III, or a part of Basel III, while banks in Vietnam have mostly implemented Basel II, the newspaper said.



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Title: Vietnam's state-owned banks under capital increase pressure

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