VietNamNet Bridge – Commercial banks earlier this year all planned to issue shares to increase their chartered capital. However, they have made no moved so far to implement the plans.

The shareholders’ meetings of Viet A Bank, Nam A Bank, OCB and Southern Bank held earlier this year agreed on the plan to issue shares to increase chartered capital which was expected to be carried out in the third or fourth quarters.

Nam A has many times failed to keep the promise to the shareholders on raising the chartered capital from VND3 trillion to VND4 trillion.

Nam A Bank President Nguyen Thi Xuan Loan has blamed the failure to objective factors, including the gloomy stock market, which keeps the stock prices at low levels and the sharp falls in bank share prices.

Meanwhile, small shareholders of the banks have suggested that the bank should seek foreign strategic partner to improve the bank’s financial capability.

Merger and acquisition (M&A) is also the choice for many banks to get financially stronger. Dai A Bank is a typical example. After the biggest shareholders, including ACB and Tin Nghia Group, withdrew capital from the bank, Dai A has decided to merge into HD Bank, even though Dai A is not the subject to the government’s compulsory restructuring plan.

After the merger, the new bank now has 8.1 trillion in chartered capital.

Most recently, PFVC and Western Bank have also merged to form up a new bank PVcomBank which has the chartered capital of VND9 trillion.

Big banks are also drawing M&A scenarios, not only to improve their financial capability, but also to become the big banks in the region.

Eximbank and Sacombank, for example, has drawn up a merger plan which is expected to be fulfilled within five years. After the merger, the new bank would have the chartered capital of VND30 trillion.

Eximbank’s President Le Hung Dung said M&A proves to be the shortest way for a bank to become a big bank of the regional stature. However, Dung said the M&A process needs thorough consideration.

If the government allows raising the ceiling foreign ownership ratio in domestic banks, to 49 percent, for example, from the current 30 percent, this would bring great opportunities to the banks which want to both improve the financial capability and improve the corporate governance.

While small banks find it difficult to increase their chartered capital, big banks have easily successfully fulfilled this by issuing shares to existing and foreign shareholders.

Sacombank, for example, has fulfilled the first phase of the plan on increasing chartered capital in 2013. Its chartered capital has increased by 17 percent from VND10,740 billion to VND12,425 billion.

Sacombank’s President Pham Huu Phu said the bank is considering choosing foreign partners for its second phase of the plan, which is expected to be fulfilled in the fourth quarter of 2013.

Eximbank plans to have VND756 billion more in chartered capital by the end of the year to raise its capital to over VND13 trillion.

VietinBank is implementing the plan to increase capital from VND32 trillion to VND37 trillion, of which the state would hold 64.46 percent, while the foreign strategic shareholder – Bank of Tokyo Mitsubishi UFJ – holds 19.73 percent, and others 15.81 percent.

US$1 = VND21,000

Tien Phong