Small-scale banks massively hike charter capital

Vietbank aims to raise its charter capital to $230 million by 2020

The State Bank of Vietnam has just authorised private lender Viet Capital Bank to raise its charter capital from VND3 trillion ($130.4 million) to VND3.5 trillion ($152.2 million), pursuant to the capital increase plan approved by the bank’s 2018 annual general shareholders’ meeting, which took place in late April 2018.

Accordingly, the shareholders had agreed for the bank to bolster its capital twice by an additional VND200 billion ($8.7 million) and VND500 billion ($21.7 million), respectively.

Meanwhile, Nam A Bank has just issued shares to pay dividend and raise its charter capital. The issuance plan came in line with the resolution of the bank’s 2018 general shareholders’ meeting.

Share issuance is one two measures the bank will apply to raise its charter capital from the current VND3.021 trillion ($131.3 million) to VND5 trillion ($217.4 million).

Accordingly, the bank issued shares to pay dividend at a ratio of 11 per cent to reach a total amount of VND332 billion ($14.4 million).

In addition, it plans to raise an additional VND1.646 trillion ($71.6 million) by issuing more than 164.6 million common stock.

The shares will be offered to existing shareholders at an estimated sum of VND906 billion ($39.4 million), and more than VND45 billion ($2 million) to bank employees, and VND695 billion ($30.2 million) through private placements.

Similarly, Vietbank was just approved by the SBV to raise its charter capital to surpass VND4.256 trillion ($185 million) from the current VND3.249 trillion ($141.3 million) through issuing shares to existing shareholders and selling to employees.

The capital hike plan was green-lighted at the bank’s general shareholders’ meeting in late April 2018 and was later amended by the board of management in June 2018.

Accordingly, if things go smoothly, during 2018-2019 Vietbank will raise its charter capital by VND500 billion ($21.7 million) annually, and by 2020 by an additional VND1 trillion ($43.4 million). Based on this schedule, by 2020, the bank could count VND5.3 trillion ($230.4 million) in charter capital.

With respect to listing plan, Vietbank unveiled that in the coming time it will raise charter capital and register to list on the Unlisted Public Company Market (UPCoM).

It is set to go on the southern bourse (HoSE) no later than 2020.

Meanwhile, on October 24, Nam A Bank closed its shareholder list, paving the way for the bank to register on the UPCoM before going on the southern bourse.

In light of the Ministry of Finance’s Circular No.180/2015/TT-BTC guiding stock listing, public companies are obliged to register to list on the UpCoM no later than December 31, 2016.

In the past two years, under guidance from the prime minister, the SBV and State Securities Commission have repeatedly asked banks to debut on the stock market to increase the transparency of stock transactions as well as their financial statements.

Instead of going on UPCoM, several banks such as TPBank and HDBank have made debuts on the HoSE.

According to Andy Ho, managing director of management fund VinaCapital, directly listing on the official stock exchange is a smart move for banks, as it has positive impacts on ticker prices.

Banks’ listing, however, needs to be fine-tuned to market conditions to ensure liquidity.