A BIDV office in Hanoi (Photo: VNA)More than 20 banks, such as Vietcombank, VietinBank, BIDV, SHB, VPBank, TPBankand OCB increased their charter capital last year. Only Techcombank andSacombank didn’t follow suit.
The bank with the strongest capital increase last year was VPBank. It raisedcharter capital from 25.3 trillion VND to more than 44.4 trillion VND throughpaying dividends in shares and issuing bonus shares for existing shareholdersat a total rate of 80 percent. The surge helped VPBank surpass Techcombank torank fourth instead of seventh position in terms of charter capital in thecountry’s banking system.
Three other banks, which also issued more than one billion shares each toincrease their charter capital by more than 10 trillion VND in 2021, were BIDV,VietinBank and Vietcombank. Last year was the first time the three State-ownedbanks had been allowed to pay dividends in shares to increase capital, after along time proposing the plan to the Government and the State Bank of Vietnam (SBV).
By the end of last year, BIDV was the bank with the largest charter capital inthe country’s banking system. After issuing more than 1 billion shares to paydividends at the rate of nearly 25.8 percent, BIDV’s charter capital increasedto 50.5 trillion VND, up more than 10.3 billion VND in early 2021.
It was followed by VietinBank with more than 48 trillion VND after the bankcompleted the issuance of nearly 1.1 billion shares to pay dividends at therate of more than 29 percent.
Industry insiders said banks had to increase charter capital strongly last yearas they have to prepare to meet the central bank’s regulation. Banks must havetheir capital adequacy ratio (CAR) to meet Basel II standards as prescribed inthe SBV’s Circular 41/2016/TT-NHNN by January 1, 2023. Up to now, 16 out of 35banks have met the requirement.
Besides meeting the central bank’s regulation, the capital increase will alsocontribute to improving banks’ financial strength and helping them increasemedium and long-term capital sources to expand business activities. Therefore,the race to increase charter capital among banks is forecast to continue stronglyin 2022./.
VNA
