The State Bank of Vietnam (SBV) said they were actively coordinating with the Ministry of Finance (MoF) to handle the issue of raising capital for state-owned commercial banks under the prime minister’s direction.
In the report of SBV to the National Assembly, Governor Le Minh Hung said that the restructuring of credit institutions had achieved remarkable results following the set goals and roadmap.
Specifically, the financial capacity of credit institutions continued to be strengthened. The charter capital increased over the years. Accordingly, by the end of August 2019, the system’s charter capital reached 591.8 trillion dong, 2.57 percent higher compared to the end of 2018 and 15.5 percent higher compared to the end of 2017. Equity of the whole system reached 856.1 trillion dong, an increase of 12.3 percent compared to the end of 2018 and 29.7 percent compared to the end of 2017. The minimum capital adequacy ratio (CAR) was 11,9%.
Regarding the goal of having at least 12 to 15 commercial banks successfully applying Basel II (standard method or higher), the Governor said so far there had been 17 commercial banks (15 domestic commercial banks, two banks with 100 percent foreign capital) had a written registration for the application of Circular No.41/2016/TT-NHNN before the effective date. In particular, 11 commercial banks had the Governor’s approval decisions, including: Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Vietnam International Commercial Joint Stock Bank (VIB), Orient Commercial Joint Stock Bank (OCB), Military Commercial Joint Stock Bank (MB), Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank), Asia Commercial Joint Stock Bank (ACB), Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Vietnam Maritime JointStock Commercial Bank (MSB), HCM City Development Joint Stock Commercial Bank (HDBank), Shinhan Bank Vietnam Limited (Shinhan Bank).
Along with that, the scale of the system of credit institutions also continued to increase. By the end of August 2019, the total assets of the credit institutions system reached 11.81 quadrillion dong, rising by 6.7 percent compared to 2018 and 18.8 percent compared to the end of 2017.
Commercial banks with more than 50 percent of State-owned charter capital (State-owned commercial banks) continued to play a leading role in the system of credit institutions. By the end of August 2019, the charter capital of four State-owned commercial banks, including Vietnam Bank for Agriculture and Rural Development (Agribank), Vietcombank, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) reached 139 trillion dong, an increase of 0.8 percent compared to the end of 2018 with total assets reached 5.081 quadrillion dong, rising by 5.29 percent compared to the end of 2018, accounting for 43.01 percent of the whole system; market one loan reached 3.652 quadrillion dong, accounting for 47.9 percent of the entire system.
However, the credit expansion of State-owned commercial banks was limited due to the capital adequacy ratio provided that these banks’ chartered capital grew slowly, especially for Agribank and VietinBank, the Governor stressed.
In order to strengthen the financial capacity of State-owned commercial banks (SOCB), to ensure compliance with the regulations on prudential ratios, to meet the capital adequacy level under Basel II capital standards (standard method), SBV was actively coordinating with the Ministry of Finance to handle the issue of raising capital for SOCBs under the direction of the prime minister.
Along with that, focusing on directing Agribank and related units to research and solve difficulties, especially on legal provisions, to accelerate the equitisation process of Agribank.
The Governor revealed that SBV had a report to the prime minister about specific financial handling related to Agribank’s equitisation.
Regarding joint-stock commercial banks, Governor Le Minh Hung said that banks were implementing the approved restructuring plan, focusing on consolidating and comprehensively adjusting the financial aspects, administering and handling bad debts, and strengthening control measures to improve credit quality, business efficiency and competitiveness.
Besides, it was essential to develop payment services, other non-credit services vigorously; expand retail and consumer credit services; promote development and diversify banking services.
By the end of August 2019, the charter capital of commercial banks reached 270 trillion dong, an increase of 1.3 percent compared to the end of 2018. Total assets reached 4.918 quadrillion dong, 8.0 percent higher compared to the end of 2018. Market one loan reached 3.033 quadrillion dong, surpassing by 11.3 percent compared to the end of 2018.
In cases of mandatory buying banks and DongA Joint Stock Commercial Bank (DongA BankDAB), during the past time, SBV said to have drastically directed these banks to build and complete the restructuring plan or recovering method. The banks had been earnestly seeking partners and negotiating with domestic and foreign investors wishing to participate in the restructuring plan.
Currently, SBV submitted to the prime minister for approval of the plan to restructure Ocean Commercial One Member Limited Liability Bank (OceanBank). For the Vietnam Construction Bank, SBV was consulting concerned ministries and branches on the draft restructuring plan under the prime minister’s direction.
