Banks cheer third fund injection

Five state banks will share $103 million in bond profits

An official from the finance ministry’s Banking and Financial Institution Department said the cash injection was the third refinancing phase of the government’s recapitalisation scheme for state-owned commercial banks to 2005.”
He did not reveal how much money each bank would receive, but said $441 million from the sale of government bonds had been allocated to the banks in the two previous refinancing phases.
Among the five state-owned commercial banks, VBARD currently tops the list with total registered capital of $285 million, followed by BIDV with $175 million, Vietcombank and Vietincombank with $162 million and MHB with $51.9 million.
The state banks are expected to receive another $103 million in the final refinancing phase early next year.
The special bonds have a term of 20 years with an annual rate of 3.3 per cent.
They cannot be traded in the first five years.
Under the amended Banking Law, state-owned banks are allowed to use bonds as collateral for short-term loans or discounts at the central bank.
The five banks have welcomed the finance injection, saying they can now improve their financial positions and thus provide loans for big borrowers.
Bankers also said the move to speed up recapitalisation would help quicken their restructuring plans.
BIDV general director Tran Bac Ha said: “With the capital injection, we will able to provide larger loans to customers, including overseas investment projects.”
Vietcombank’s Ho Chi Minh City branch director Nguyen Phuoc Thanh agreed, saying that the move would pave the way for banks to approach big borrowers, and would allow them to provide increased and better medium- and long-terms loans.
Regulations allow banks to provide a single customer with loans equivalent to less than 15 per cent of the bank’s registered capital.