Changes reported in banks' charter capital

Wednesday, Sep 16, 2015 09:47

The total charter capital of the Viet Nam's 12 smallest commercial banks by the end of Q2 was worth nearly US$1.68 billion. — Photo

HA NOI (Biz Hub) — The total charter capital of the country's 12 smallest commercial banks by the end of the second quarter was worth only VND37.694 trillion (US$1.675 billion).

That is just VND460 billion ($20.4 million) higher than that of Vietinbank, which currently retains its top position with a charter capital of VND37.234 trillion ($1.65 billion). Vietinbank is also trying to raise capital to VND49 trillion ($2.17 billion) by the end of this year.

According to the latest financial reports from 34 commercial banks, some changes in their charter capital were reported after the banking industry underwent restructuring these past five years.

Thanks to a merger with MHB in May this year, BIDV follows Vietinbank with a charter capital of VND31.481 trillion ($1.399 billion). Previously, BIDV's charter capital was much lower than that of the leading Vietinbank.

The report shows that the 34 banks currently can be classified into three groups: the first group including 9 banks with a charter capital of more than VND10 trillion (US$444.44 million) each, the second group including 9 banks with a charter capital of VND5-10 trillion ($222.22-444.44 million) each, and the third group has a charter capital of less than VND5 trillion ($222.22 million) each.

In the third group, nine banks have charter capital hovering around VND3 trillion ($133.33 million) each. These are BaoVietBank, KienLongBank, NamABank, PGBank, VietcapitalBank, CBBank, NCB, GP. Bank and NamABank.

The deputy director of a small bank, who declined to be named, admitted that it was now difficult for small banks to compete against larger banks in capital mobilisation due to their brand image.

"Most depositors think that small banks are weak, and therefore such banks face challenges in capital mobilisation," he said.

Banking expert Nguyen Tri Hieu said small banks had adopted the same business strategies as larger banks, and were at a disadvantage while competing against the latter.

This has made many small but good banks, especially the ones that have no specific business strategy, draw up plans for mergers with other banks to become large banks. Financial experts said the trend was picking up.

Under the M&A trend, the number of banks in Viet Nam would reduce, Hieu said, adding that the number of banks should be reduced by 19 to touch roughly 15 banks in the future.

He said a fall in the number of banks would help en-hance their health and strength by increasing ownership capital, making performance more effective, and help to manage non-performing loans better.

If they are not opting for M&A, small banks are trying to raise capital to become larger banks.

Statistics show about 12 banks have so far planned to increase their charter capital this year, of which VP Bank and Bac A Bank successfully increased the capital to VND8.056 trillion ($358.04 million) and VND4.4 trillion ($195.55 million), respectively.

MB Bank is also expected to raise its charter capital to VND16 trillion ($711.11 million) in the next few weeks. If the plan is successful, MB Bank will surpass Sacombank to rank fifth in terms of charter capital.

Some small banks such as VietABank and NamA-Bank have also planned to increase their charter capital to VND4.2 trillion ($186.66 million) and VND4 trillion ($177.77 million) from the current VND3.098 trillion ($137.68 million) and VND3.021 trillion ($134.26 million), respectively.

SBV okays Sacombank, Southern Bank merger

The State Bank of Viet Nam (SBV) has approved the merger of Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) with the Southern Commercial Joint Stock Bank. According to Sacombank's announcement on its website, the merger came into effect early this week.

The new bank will retain the name Sacombank. It has a syndicated charter capital of more than VND18.8 trillion (US$837 million).

Earlier, the shareholders of both banks agreed to their merger at meetings held in July, with 93.7 per cent of Sacombank shareholders and 99.88 per cent of Southern Bank shareholders approving it.

Each share of Southern Bank was converted into 0.75 per cent of one share of Sacombank.

Sacombank was established in 1991. The bank's assets at the end of 2014 were worth more than $12.4 trillion ($550 million). The Southernbank was established in 1993. It had assets worth VND4 trillion ($177 million) at the end of 2014. — VNS

Comments (1)

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Thanh - Tuesday, 05/01/2016, 10:24 Reply | Like