AGMs to accelerate banks’ charter capital raising

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Six out of seven joint stock commercial banks plan to raise their chartered capital, with other 32 banks preparing for meetings in April.

Mekong Development Bank completed raising its charter capital to VND3 trillion ($145 million) on December 9 last year after selling  a 15 per cent stake to Fullerton Financial Holdings (FFH), an arm of Temasek Holdings Pte.Ltd, Singapore.

NamA Bank, DongA Bank, VietA, TrustBank, Habubank, Maritime Bank have already had approval from shareholders to raise capital with total value of VND8.4 trillion ($405.7 million) in total.

Maritime Bank set the highest level to add VND3 trillion ($145 million), raising the total chartered capital to VND8 trillion ($386.4 million) this year. VietA Bank wants to add only VND161 billion ($7.7 million) to chartered capital.

Of which, Maritime Bank will issue shares for current shareholders with a value of VND2 trillion ($96.6 million) in the second quarter and bonus shares valued at VND1 trillion ($48.3 million) in the last quarter.

DongA Bank plans to increase its chartered by VND1.5 trillion through issuing shares  valued at VND600 billion ($28.9 million) for current shareholders. The bank will issue shares valued at VND900 billion ($43.4 million) for a potential foreign partner, equivalent to 15 per cent of the bank’s stake.

“We have had talks with foreign financial institutions, but have yet made any final decision to choose a partner. We need approval from shareholders to go ahead and find a possible and potential foreign partner,” said Tran Phuong Binh, DongA Bank’s general director.

Banks such as Sacombank and Gia Dinh will conduct meetings shortly and inform shareholders to raise the chartered capital through issuing shares for current shareholders, Sacombank will raise its capital by VND1.5 trillion and Gia Dinh Bank to raise by VND1 trillion.

“We will change our strategies in the next decade by focusing on raising equity instead of chartered capital like the past decade in order to increase our competitiveness,” said Dang Van Thanh, Sacombank’s chairman.

Sacombank plans to raise its equity to VND15.6 trillion ($753.6 million) this year and over VND30 trillion ($1.4 billion) after 2015.

Over 20 banks in Vietnam are still operating with a chartered capital lower than the required limit of VND3 trillion which is set out by the Decree 141/2006/ND-CP governing credit institutions’ legal capital issued in November 2006.

The decree stated all banks must achieve  minimum chartered capital of VND3 trillion ($150 million) by the end of 2010. However, in late December 2010, the government gave a 12-month extension.

Although authorities have now extended the banks' deadline to raise chartered capital, at least five local banks had already done so by the end of last year. Among these were the local commercial banks HDBank, VietBank, DaiA Bank, Tien Phong Bank and Standard Chartered Bank.