VN banks prepare for transformation

The Vietnam Bank for Agriculture and Rural Development (Agribank) is the only bank of the "big 4" State-owned banks in Vietnam that has not been equitized.

Chờ đợi 14 năm, ông lớn ngân hàng dồn sức cho cú chuyển đổi

In the past five years, the charter capital of Agribank has only increased by 5.4%, while its total assets rose by 56.5% and its profit has continuously risen.

While the equitization of the Bank for Foreign Trade of Vietnam (Vietcombank), Bank for Investment and Development of Vietnam (BIDV) and Vietnam Bank for Industry and Trade (VietinBank) has been completed for a long time, the largest bank in terms of total assets, and number of customers and network has lagged behind for 14 years.

Recently, Agribank approved a plan to sell Agribank Financial Leasing Company I (ALC I). As soon as the announcement was made, large investors registered to buy the entire ALC I, and Agribank had to consider the most profitable option.

ALC I is a large financial leasing company in Vietnam that has suffered huge losses due to the impact of the global financial crisis more than 10 years ago. Thanks to the restructuring process, its accumulated losses have been sharply cut. Also, ALC I has benefited many advantages from the parent bank as well as a potential market position. This is the reason why investors are willing to pay good prices and inherit its debt.

Once ALC I is sold, Agribanks will have a large source of money to strengthen its capacity before launching an IPO, which is scheduled in 2022.

In order to strengthen the financial capacity of the bank and to perform social responsibilities, in mid-2020 the National Assembly approved a resolution to provide the bank with VND3,500 billion to raise its charter capital. The bank also received over VND3,000 billion from the state budget to cover its loans to implement the state's policies in the previous period.

 

However, these figures are still small compared to the scale of the bank's operations. After being granted an additional VND3,500 billion, the bank’s charter capital is only VND34,000 billion. The ratio of charter capital to total assets of Agribank is currently just over 2%, compared to about 10% of other banks.

Recently, Vietinbank’s plan to increase its charter capital by nearly VND7,000 billion was approved while Vietcombank is expected to be allowed to raise its charter capital by VND10,000 billion. After their chartered capital is increased, three banks in the "Big 4" group will have charter capital of over VND40,000 billion.

The slow increase of charter capital compared to the growth rate of credit and total assets affect not only these banks but also the implementation of state's monetary policies, and policies to support socio-economic development.

In the past five years, the charter capital of Agribank has only increased by 5.4%, while its total assets rose by 56.5% and its profit has continuously risen.

US$1 = VND23,000

V. Ha

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