Banking on muscling up charter capital

For example, TrustBank’s plan to hike its chartered capital from current VND3 trillion ($144.9 million) to VND5 trillion ($241.5 million) by the year’s end got the nod from shareholders recently.

The bank’s executives said the move was crucial to help TrustBank expand financial resources to stay competitive in the market.

Accordingly, of the proposed VND2 trillion to be added to the chartered capital TrustBank plans to spend VND500 billion ($24.1 million) on upgrading the material base and buying fixed assets for operational network expansion. Besides, it will inject VND60 billion into technological innovations, VND20 billion in card services development and put another VND200 billion on founding affiliates.

TrustBank’s chairman Hoang Van Toan said the bank had to source capital at high interest rates in the interbank market and this had driven up its operational costs significantly. Hiking chartered capital was then essential to help bank realise its ambitious development targets.

Similarly, HD Bank is set to raise its chartered capital to more than VND5 trillion from current VND3 trillion and sell part of the additional capital to the strategic partner.

Under its 2011 shareholders meeting’s approved plan, DongA Bank will hike its chartered capital to VND6 trillion ($289.8 million) from current VND4.5 trillion. Part of the additional capital will be used to upgrade existing 18 transaction offices spanning across the country into branch offices in 2011, according to the bank executives.

Besides, VND400 billion will be put into buying new workspace and building its headquarters.

DongA Bank’s general director Tran Phuong Binh said the bank would hike its chartered capital in the fourth quarter due to current difficult situation in local financial market and possibly sell VND900 billion ($43.4 million) of the proposed additional capital to foreign strategic partners.

OceanBank will also attempt to raise its chartered capital from current VND3.5 trillion to VND5 trillion and post pre-tax profits of VND800 million in 2011 against 2010’s VND691 billion. This year, the bank will offer shareholders a 12 per cent dividend rate, according to the bank’s development plan which will be submitted for approval in the upcoming shareholders’ meeting to be held this month.