The increase in charter capital of banks in the recent time is mainly through issuing shares to existing shareholders.
With the approval of the State Bank of Vietnam (SBV) and the State Securities Commission (SSC), in September 2019, Southeast Asia Commercial joint Stock Bank (SeABank) completed a share offering to increase charter capital from 7.688 trillion dong to 9.369 trillion dong. With this new level of charter capital, SeABank is among the 15 banks with the largest charter capital in Vietnam.
This charter capital increase is in SeABank’s development plan, which was approved at the bank’s 2019 annual general meeting (AGM) in order to make it become the most favourite retail bank.
The SBV has announced amendments to the charter capital of two banks. Specifically, the SBV issued a decision to amend the content about charter capital in the Establishment and Operation License of Vietnam International Commercial Joint Stock Bank (VIB). Accordingly, VIB’s charter capital is now 9/245 trillion dong instead of 7.834 trillion dong as before. The bank has issued more than 141 million shares to existing shareholders, equivalent to an issuance rate of 18 percent.
Similarly, the charter capital of Orient Commercial Joint Stock Bank (OCB) also officially increased to 7.898 trillion dong. Previously, in the end of the second quarter (Q2) of 2019, OCB’s charter capital was 6.599 trillion dong. The charter capital increase of the bank was carried out through the issuance of shares to pay dividends to shareholders at the rate of 20 percent. The number of shares issued was nearly 130 million shares.
With the plan to issue shares of some banks in the near future, it is expected that the new ranking of banks’ charter capital in 2020 will see many changes.
According to statistics, by the end of June 2019, the total charter capital of 35 Vietnamese banks reached more than 419 trillion dong. In the top 5 banks with the largest charter capital, the charter capital of Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) was the highest with 37.234 trillion dong, respectively followed by Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), and Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) with charter capital of respectively 37.089 trillion dong, 34.966 trillion dong, 34.187 trillion dong, and 30.496 trillion dong by the end of June 2019.
In the last five years, Techcombank and Vietcombank recorded the most charter capital increase. Compared to the beginning of 2015, Vietcombank’s charter capital has been raised by more than 10.4 trillion dong (equivalent to over 39 percent), while Techcombank’s charter capital has increased by fourfold.
The sharp rise of Techcombank’s charter capital came from the issuance of shares to existing shareholders at the ratio of 1:2 in 2018, after the bank’s shares were listed on the HCM City Stock Exchange (HoSE). This is the first time a private joint stock bank is in the top three banks with the largest charter capital.
For Vietcombank, in 2016, the bank issued bonus shares to existing shareholders at a ratio of 35 percent (equivalent to more than 9.3 trillion dong). In early 2019, the bank’s charter capital increased by more than one trillion dong thanks to the issuance of shares to GIC and Mizuho Bank.
Meanwhile, VietinBank and BIDV, after the strong charter capital increase in 2013 and 2014 thanks to the issuance of shares to strategic shareholders, have almost made no changes to their charter capital; while Agribank’s charter capital slightly increased by one trillion dong.
At present, eight banks in the system have charter capital equal to or just higher than the legal capital (three trillion dong), of which two banks were purchased by the SBV at zero dong per share, including Construction Bank (CBBank) with charter capital of three trillion dong and Global Petro Bank (GPBank_ with 3.018 trillion dong. Other banks that have charter capital of around three trillion dong are Petrolimex Group Commercial Joint Stock Bank (PGBank), Saigon Commercial Joint Stock Bank for Industry and Trade (Saigonbank), Bao Viet Commercial Joint Stock Bank (BaoVietBank), Viet Capital Commercial Joint Stock Bank (VietCapitalBank), Kien Long Commercial Joint Stock Bank (Kienlongbank), etc.
Year 2020 is the deadline that 10 banks in the pilot group shall meet the capital adequacy ratio under Circular 41. The charter capital increasing plan of banks must be accelerated to meet this requirement.
For many banks, 2020 is the last year of their restructuring and bad debt settlement phase set five years ago. The SBV’s statistics show that the total assets of credit institutions (CIs) as of late April reached up to 11,210 trillion dong. This number compared to 10 years ago is estimated to have increased by more than four times.
Meanwhile, according to uncompleted statistics, as of June 30th 2019, the total assets of 29 banks (excluding three “zero dong” banks, Dong A Commercial Joint Stock Bank (DongABank), Vietnam Public Joint Stock Commercial Bank (PVcomBank) and Bao Viet Commercial Joint Stock Bank (BaoVietBank)) reached more than 9,600 trillion dong.
