It is necessary to improve the financial capacity of four state-owned commercial banks

Many plans to increase capital for four state-owned commercial banks have been proposed and implemented. Photo: ST

State-owned commercial banks continue to play a leading role in the credit institution system; Actively participating in supporting and handling weak credit institutions and devoting resources to support interest rate reduction...

According to the State Bank (SBV), by the end of June 2023, the charter capital of four commercial banks with state capital (Agribank, Vietcombank, VietinBank, BIDV) reached VND 180.4 trillion, total assets reached nearly VND 7.6 million billion But ensuring the minimum capital adequacy ratio and credit growth, increasing capital for these four "big guys" is considered an urgent task.

The Government's report sent to National Assembly delegates on the banking sector said that the Government has implemented many solutions to increase capital for four commercial banks with state capital.

In particular, with Agribank, authorized by the Prime Minister, the State Bank of Vietnam reported to the National Assembly at the 5th session of the XV session and in Resolution No. 101/2023/QH15, the National Assembly approved the policy of additional investment charter capital to Agribank for the period 2021-2023 corresponds to the remaining profit actually paid to the state budget for the period 2021-2023 of Agribank, a maximum of 17,100 billion VND (of which in 2023 it is 6,753 billion VND; 2024 is 10,347 billion VND). Implement processes and procedures for additional capital investment according to the Law on Management and Use of State Capital Invested in Production and Business at Enterprises and guiding Decrees, based on the submission of the State Bank of Vietnam and Deputy Prime Minister Le Minh Khai signed Decision No. 1118/QD-TTg dated September 25, 2023, on the investment plan to supplement Agribank's charter capital.

With this increase, Agribank's leadership believes that this additional capital is only enough for credit growth until 2024. It is expected that in 2025, to grow 10% of credit balance, Agribank needs to be granted by the State. additional charter capital of 10,000 billion VND. Agribank's charter capital scale as of December 31, 2022, is the lowest among the group of commercial banks with state capital, even much smaller than some other joint stock commercial banks.

At BIDV, this bank has the highest charter capital in the "big four" group, the need to increase the bank's capital is always urgent. BIDV's 2023 General Meeting of Shareholders has approved the plan to increase charter capital by 21.7% to VND 61,557 billion and is awaiting approval for implementation. Accordingly, the bank is expected to issue more than one billion shares, of which nearly 642 million shares are to pay dividends in 2021 and the rest is to issue additional shares in the form of public offerings or individual offerings (455 million shares).

The Government report also mentioned that on September 25, 2023, Deputy Prime Minister Le Minh Khai signed Decision No. 1119/QD-TTg approving the plan to invest additional state capital in BIDV to maintain the ratio of State ownership from the source of dividend payments to state shareholders (through BIDV issuing shares to pay dividends from the remaining profit after tax, after setting up funds in 2021).

For Vietcombank and VietinBank, the State Bank of Vietnam sent an official dispatch asking for comments from the Ministries of Finance, Justice, Planning and Investment on the draft Proposal to the Government and the draft Proposal to the National Assembly on additional investment of state capital at Vietcombank through payment of stock dividends from accumulated remaining profits until the end of 2018 and remaining profits in 2021. The State Bank has also asked for comments from the Ministry of Finance on the Draft Proposal to the Prime Minister and the Draft Decision of the Prime Minister on the plan to invest additional state capital in VietinBank through payment of stock dividends from the remaining profits in the period 2009-2016 and 2021.

At Vietcombank, at the 2023 General Meeting of Shareholders, the bank presented a plan to increase charter capital from retained profits in 2021 and remaining profits accumulated until the end of 2018. Vietcombank is expected to issue a maximum of nearly 2.77 billion shares to pay dividends to shareholders, increase charter capital by VND 27,685 billion, raising the bank's charter capital from more than 47,325 billion to more than VND 75,000 billion. In July, Vietcombank issued nearly 856.6 million shares to pay dividends at the rate of 18.1%, raising the bank's total charter capital from VND 47,325 billion to VND 55,891 billion from the two sources mentioned above.

For VietinBank, at the 2023 General Meeting of Shareholders, the bank approved two plans to increase charter capital, to VND 60,387 billion or VND 66,030 billion, depending on whether the charter capital increase is completed from the remaining profit source of 2020 or not.

At the beginning of the year, leaders of four commercial banks with state capital proposed to increase capital resources. For example, with Vietcombank's development goal by 2025 and orientation to 2030 to maintain its position as the No. 1 bank in Vietnam and among the 100 largest banks in Asia, the solution is to increase capital and improve financial capacity and strictly control the quality of credit portfolio. Agribank also urgently needs to increase capital to ensure the minimum capital adequacy ratio to serve the capital needs of the economy, especially the Tam Nong sector.