return icon Vietnamnet.vn

Low CAR spells doom for state-owned banks

State-owned commercial banks are growing concerned over the critically low capital adequacy ratio (CAR) of around 9 per cent, which also hit the minimum required CAR for the Vietnamese banking system.
State-owned commercial banks are growing concerned over the critically low capital adequacy ratio (CAR) of around 9 per cent, which also hit the minimum required CAR for the Vietnamese banking system.


{keywords}



Specifically, recent statistics provided by the National Financial Supervision Commission (NFSC) presented a downward trend in the average CAR of the entire banking system from over 12 per cent in 2016 to around 11 per cent in 2017.

Notably, financial statements provided by numerous state-owned finanical institutions (FIs) showed an alarmingly low CAR of 9 per cent.

Despite the laudable efforts of maintaining credit growth stability (18-19 per cent), nearly 20 FIs failed to reach the targeted CAR at the beginning of 2017 due to failed attempts of raising charter capital.

Nguyen Van Thuy, deputy head of NFSC's General Supervision Department, asserted, “Regardless of the 40 per cent profit growth, there is little to prevent the pressure on state-owned commercial banks. Besides, in order to fit the Basel II requirements, banks must accelerate the plan to double their current charter capital.”

Likewise, Nguyen Xuan Thanh, lecturer at Fulbright University Vietnam, noted, “By the end of 2019, Basel II will take effect, which will likely pose a great threat to state-owned commercial banks that have to double their charter capital in less than two years.”


Additionally, a representative of Bao Viet Securities (BVSC) also highlighted that the charter capital augmentation would be the main task of state-owned commercial banks, especially Vietcombank, VietinBank, and BIDV, as well as seeking foreign strategic partners, mergers and acquisitions (M&A) opportunities, and paying dividends in the form of additional shares.

However, such solutions must be approved beforehand by the Ministry of Finance as the well-being of the entire economy could be heavily impacted.

In spite of the healthy profitability ratio of Vietnamese banking system, foreign investors still have to overcome copious hurdles in partaking in share transactions, such as the restructuring of the banking system and regulations limiting individual investors’ shareholding at a maximum of 20 per cent of the charter capital.

VIR


MORE NEWS

Lonely Planet reveals eight attractive treks in Vietnam

Tribal treks around Bac Ha and Cultural treks from Sa Pa have been named among the eight best treks for travelers to enjoy when visiting the nation, according to the Australian version of renowned travel guide Lonely Planet.

Vietnam posts US$10.6 billion trade surplus in Jan-Nov

The country’s exports amounted to US$342.2 billion while its import spending totaled US$331.6 billion between January and November, generating a trade surplus of US$10.6 billion, according to the General Statistics Office of Vietnam.

What are Vietnam’s opportunities in the face of new reforms in China?

Vietnam-China relations in the past were based mostly on trade and construction bids. What will be important for the new period?

US spends over US$13 billion purchasing local computers and electronics

Vietnamese electronic computers and component exports to the United States during the initial 10 month of the year surged by 26.4% to reach US$13.23 billion against the same period from last year.

Experts discuss need for capital disbursement, loans to enterprises

More public investment funds should be disbursed and credit limits lifted to provide capital and improve capital flow, experts have said.

Vietnam welcomes 2.95 million foreign tourists over 11-month period

The country welcomed 2.95 million foreign visitors during the initial 11 months of the year, a figure 21.1 times higher compared to the same period from last year, but still down 81.9% compared with pre-pandemic levels in 2019.

Ministry to tighten control of joint training programs with foreign partners

About 25,000 students are studying in about 300 joint programs with foreign schools in Vietnam.

IPP Air Cargo approval procedure suspended at investor's request

The Transport Ministry has informed to the Prime Minister of a suspension of the approval procedure for the IPP Air Cargo JSC at the request of the carrier’s investor.

Borussia Dortmund touches down in Vietnam

Renowned midfielder Marco Reus and a delegation made up of 123 players and staff from leading German side Borussia Dortmund landed at Noi Bai International Airport on November 29.

National Assembly Chairman begins official visit to Australia

National Assembly Chairman Vuong Dinh Hue and the Vietnamese NA's delegation arrived in Canberra on November 29 evening (local time), starting an official visit to Australia from November 30 - December 3.

VIETNAM NEWS HEADLINES NOVEMBER 29

International Circus Festival to open in December

VIETNAM BUSINESS NEWS NOVEMBER 29

EVN's losses estimated at VND31.3 trillion in 2022

Co la, the food tray that demonstrates Muong ethnic culture in Hoa Binh

For Muong ethnic people, especially those living in Hoa Binh Province, cỗ lá (literally means a food tray displaying several dishes) is more than just a popular food.

Experts call for Hanoi to become a 'creative city'

Cultural industry development is a new issue, and Hanoi does not have much experience promoting its potential advantages.

Apple jumps to second highest seller of smartphones in Vietnam for first time

iPhone accounted for 20.5 percent of market share in Vietnam in October 2022, according to GfK.
back_to_top