Agribank to receive VND17 trillion charter capital boost

May 15, 2023 | 09:00
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On the morning of May 13, the National Assembly Standing Committee convened its 23rd session to discuss the provision of supplementary charter capital amounting to VND17.1 trillion ($743.5 million) for Agribank.
Agribank to receive VND17 trillion charter capital boost

This resolution, directed by the National Assembly, instructs the State Bank of Vietnam (SBV) to devise a plan to augment the charter capital of commercial joint-stock banks, in which the state holds over half of the charter capital, using post-tax profits and reserved funds from 2021 to 2023.

Based on the State Budget Law, Law No. 69/2014/QH13, and Resolution No. 43/2022/QH15, the government has formally proposed to the National Assembly the consideration and decision-making regarding the investment policy of supplementing Agribank's charter capital with a sum of VND17.1 trillion.

The government suggests that the additional charter capital for Agribank be sourced from the central budget expenditure estimate for the year 2023, as approved by the National Assembly in Resolution No. 70/2022/QH15.

The remaining portion will be allocated from the state budget in accordance with legal provisions and executed through transfers during the year 2024.

As declared by the Deputy Governor of the SBV Doan Thai Son, Agribank, as a wholly state-owned commercial bank, occupies a vital position in meeting the credit capital needs for national economic development, particularly in the dominant role it plays in the agricultural and rural sectors.

Agribank consistently commands the largest market share in the credit portfolio (approximately 14 per cent) and is a key player in the agricultural investment and development.

“However, as of December 31, 2022, Agribank's charter capital stands at its lowest level among state-owned commercial banks and is even considerably smaller than that of some private banks. Consequently, without an increase in capital, Agribank would be unable to fulfill its pivotal role in shaping the banking market, particularly in the agricultural and rural sectors where it primarily operates,” Son said.

Therefore, the injection of additional charter capital into Agribank aims to augment its capital base and meet the minimum capital adequacy ratio, as prescribed at 8 per cent.

Besides, the SBV has also put forth a proposal to the Prime Minister regarding the investment plan for additional state capital in Vietcombank. Furthermore, SBV has instructed Vietcombank, Vietinbank, and BIDV to develop plans for increasing their charter capital from post-tax profits and reserved funds in 2021. These plans will be submitted for approval by the Prime Minister.

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By Trung Duong

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