Bank shareholders interested in restructuring plans of weak credit institutions

Tuesday, May 07, 2024 10:04

View of VPBank’s recent annual general meeting of shareholders. — Photo

Many shareholders of banks have shown interest in plans to restructure banks and receive the compulsory transfer of weak credit institutions (CI).

At VPBank’s recent annual general meeting of shareholders (AGM) last week, Ngô Chí Dũng, chairman of VPBank’s board of directors, said not all banks had enough financial and management capacity to participate in restructuring weak CIs, which had huge accumulated losses and were continuing to make loss.

However, VPBank had a large capital base as it is backed by Japanese partner SMBC.

Dũng said capital growth was very important in VPBank's strategy and although the participation in restructuring the weak CIs would not immediately bring VPBank financial benefits, it could see higher credit growth and foreign ownership ratio according to the State Bank of Vietnam's (SBV) current incentive policies.

Banks’ foreign ownership ratio is capped at 30 per cent while many foreign investors currently still want to pour in VPBank. Therefore, if the foreign ownership ratio is expanded thanks to the participation in restructuring weak CIs, VPBank can increase the capital scale, according to Dũng.

Nguyễn Thanh Tùng, general director of Vietcombank, said they had completed a plan to receive the compulsory transfer of a weak CI and were currently submitting it to the SBV for approval. Under the plan, Vietcombank had proposed specific solutions to ensure a smooth transfer and compliance with the roadmap.

In addition, Tùng said, Vietcombank was also reviewing the network and assessing the human resource quality of the weak CI to detect and overcome its limitations and had established sub-committees to support the transfer of the weak CI.

The transfer would be carried out in 2024. In the long term, receiving the compulsory transfer of weak CIs would create opportunities for Vietcombank to have many options such as selling shares or merging, Tùng said.

At Military Bank (MB)’s recent AGM, chairman of MB’s board of directors Lưu Trung Thái said this was an opportunity to open up new development space, especially credit growth and governance improvement.

Thái expected MB's plan to receive the mandatory transfer of a weak CI would be approved in April.

The question of the ability to participate in restructuring weak CIs was also raised by many shareholders at HDBank’s recent AGM. Nguyễn Thị Phương Thảo, vice chairwoman of HDBank’s board of directors, said it was one of four banks that had been assessed to have healthy operations and good financial capacity to be selected to participate in an SBV project to restructure the commercial banking system.

When participating in restructuring weak CIs, HDBank would have the opportunity to break through, dominate the market and become one of the top banks in the next five years thanks to the SBV’s preferential policy to have higher annual credit growth quota, Thảo said.

There are several weak CIs in the Vietnamese banking system that are being put under special control and have to undergo restructuring as per the request of the Government. Three of them are Ocean Bank, GPBank and CBbank, which the SBV bought for zero đồng. — VNS 

Comments (0)