Banks are facing capital increase pressure, ensuring adequacy safety to meet Basel II standards. Banks that have the Capital Adequacy Ratio (CAR) at around nine percent will have to consider Tier 1 or Tier 2 capital raising methods, so not only small banks but also 10 pilot commercial banks will also have to increase capital.
The State Bank also encourages banks to make dividend payment in shares to enhance financial capability, meeting new standards.
Raising capital to meet Basel II standards is not an easy task even for giants such as Vietcombank, Vietinbank, BIDV, etc. despite very early preparation.
For small banks, difficulties are even more. With the chartered capital to be equal to the legal capital of three trillion dong, or slightly higher, banks are very difficult to enhance financial capability, even to exist when competition in the market is increasingly tense, and the roadmap for application of Basel II comes close.
The entire banking system has about six banks with low chartered capital (Kienlongbank, Viet Capital Bank, Viet Bank, Viet A Bank, Saigon Bank, Nam A Bank, etc.) and all of them have plan to raise capital as well as to list in this year. Specifically, Nam A Bank submitted to the annual general meeting to approve capital raising plan from more than three trillion dong to five trillion dong and list on Hochiminh City Stock Exchange (STC).
Chair of Vietbank Duong Ngoc Hoa said the bank will list on Upcom before listing in 2020 and carry out the capital increase plan to five trillion dong compared to the current three trillion dong.
Meanwhile, Viet Capital Bank, Kienlongbank have not had plans to additionally increase chartered capital, though the capital is only equal to the prescribed legal capital.
Banks expect that favourable stock market, rising bank stock prices will be the opportunity for them to mobilise capital when listing on the stock exchange.
According to financial and economic experts, the listing on the stock exchange is necessary to attain transparency in operations, seeking for opportunities to mobilise capital against the pressure of meeting Basel II standard by 2020.
However, banks are not easy to succeed in the capital mobilisation when listing because if they do not have enough potential, it will be difficult for them to attract the interest of investors.
Financial expert Nguyen Van Thuan said for investors, the choice of pouring capital into banks and businesses always comes after having considered and calculated carefully.
The reality shows that with 16 shares having transacted on the bourse, not all will increase strongly over the last period. Only shares of banks that have strength and have settled bad debt (VCB, ACB, VPB, HBD, CTG, MB…) can have price increase margin of about 40 percent compared to the beginning of 2017.
The race following the wave to list on the bourse to mobilise capital is even not easy for small banks. Even, ailing banks that cannot increase financial capability and competitiveness will be hard to avoid M&A, even after listing.
This has been proven by the fact that Navibank has quickly listed on Hanoi Stock Exchange (HNX) but due to business losses, they were subject to restructuring, and had to change owners since 2013, and then rename into NCB since 2014.
An established name in the market i.e. Sacombank also could not avoid M&A wave when at the end of 2012, it fell into the hands of the large shareholder group, and the founder Dang Van Thanh had to leave the post as Chair, though it was the first bank in the banking system to list right after the stock market was established. At that time, Sacombank’s business was progressing well, with trillions of dong profit.
