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Vietnam expects big changes in bank rankings after capital increases

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The entire banking system is expected to need VND63 trillion to increase their charter capital this year.

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The expected chartered capital of some banks

 

The capital adequacy ratio (CAR) of Vietnam’s commercial banks decreased by 0.25 percent to 11.98 percent by the end of February 2018 in comparison with late 2017. 

The CAR of state-owned banks decreased by 0.16 percent to 9.36 percent, while that of joint stock banks by 0.44 percent to 11.03 percent.

Banks have to raise their charter capital as soon as possible to satisfy Basel II standards. Eighteen out of 34 banks have announced plans to increase capital in 2018, and if the plans go smoothly, the total capital would increase by VND63 trillion.

Of these, some banks want to raise capital by trillions of dong. VP Bank, for example, plans to have VND10.594 trillion more, while BIDV VND9.451 trillion. 

Smaller banks are also following daring capital increase plans. ABBank wants to double its capital to VND10.638 trillion, OCB by 50 percent to VND5.7 trillion, SeABank by 65 percent to VND9 trillion, and Nam A by 70 percent to VND5 trillion.

Other small joint stock banks are quiet. The State Bank in 2014 approved BaoViet Bank  raising its capital to VND5.2 trillion, but its real capital remains at VND3.15 trillion. 

SaigonBank still has not implemented its plan to raise capital from VND3.08 trillion to VND4.08 trillion it drew in 2014.

Other banks only have the minimum charter capital of VND3 trillion as required by the laws to operate, such as VietCapital Bank and Kien Long Bank.

If the capital increase plans succeed, BIDV and Vietcombank will become the biggest banks and the first two banks with more than VND40 trillion worth of charter capital. The fourth and fifth positions will belong to VP Bank and Military Bank (more than VND20 trillion).

The group of banks with VND10-20 trillion in charter capital will include new names such as HDBank, ABBank and LienViet Post Bank, together with existing ones - Sacombank, SCB, SHB, ACB, Eximbank, Maritimebank and Techcombank. 

As for small banks, if some of them successfully fulfill their plans, there would still be 16 banks with capital of less than VND10 trillion, including eight banks which have less than VND5 trillion.

In fact, many banks planned to raise capital several years ago, but their plans are still on paper. Most of them are small banks and state-owned banks.

As for state-owned banks, since the state still holds the controlling stake, it is difficult to raise capital by paying dividends in shares or issuing bonus shares. 

However, analysts are optimistic about this year’s plan, as VIetcombank has received approval for a plan to issue shares specifically to foreign investors.

US$1=VND22,000

 

Source: VietNamNet

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