Luu Trung Thai, CEO of Military Bank, said the admission of a bank under the compulsory transfer program is in line with the Government and the State’s policy on restructuring weak banks, and making the banking operation healthier and sustainable. This is a great opportunity to obtain an operational growth rate higher than the average growth rate by 1.5-2 times in the long term, and to improve competitiveness. 

After Military Bank admits the credit institution, it will become the 100 percent owner of the institution. The credit institution for compulsory transfer must be a legal entity which is independent from Military Bank. The bank has some rights and some benefits in accordance with the laws. One of them is that Military Bank can exclude the credit institution when calculating the consolidated capital adequacy ratio. 

At the time of admission, the credit institution has charter capital of no more than VND5 trillion. The real charter capital and reserve funds must be not higher than minus VND20 trillion. After admitting the compulsorily transferred credit institution and operating under the mode of a one-member limited company, Military Bank will have the right to contribute capital of VND5 trillion to the institution in accordance with a roadmap. 

There are several weak banks in the banking system that are being put under special control and have to undergo restructuring as per the request of the management agency. Three of them are ‘zero dong banks’, i.e., the banks the State Bank of Vietnam (SBV) bought for zero dong, namely Ocean Bank, GPBank and CBbank. 

Seven to eight years after being acquired, the banks are still in difficulties and there has been no breakthrough in the restructuring process.  

The compulsory transfer of credit institutions to banks with powerful capability is hoped to make a breakthrough in restructuring weak banks. 

Some shareholders have expressed concern about possible difficulties when admitting an institution. 

In reply, Thai said the Military Bank sent as chosen to admit a weak credit institution because the bank is a good bank and capable of implementing the task.  

He also said that admitting a credit institution will bring benefits to Military Bank. The growth rate capability of the bank could be higher than that allowed by the central bank.

At present, Military Bank is witnessing the growth rate of 20-25 percent, while it can obtain the growth rate of 30-35 percent. As such, with the admission, Military Bank will be able to expand the growth space. 

At the 2022 shareholders’ meeting, Military Bank plans see the total assets increase by 15 percent to VND700 trillion, and the charter capital increase by 24 percent to VND46.882 trillion. The bank has set a pre-tax profit of VND20.3 trillion this year, an increase of 23 percent over 2021.  

If macroeconomic conditions become difficult, the bank projects profit of VND19 trillion, an increase of 15 percent. 

With that goals, Military Bank has joined the club of banks with the profit of $1 billion or higher.  

Vietcombank was the bank which first obtained the profit of $1 billion (in 2019 and 2020) 

Techcombank, owned by billionaire Ho Hung Anh has reported the pre-tax profit of VND23.3 trillion for 2021 ($1 billion), an increase of 47 percent over 2020. It was the first private bank obtaining the pre-tax profit of $1 billion. 

Meanwhile, VPBank for the first time made the profit of $1 billion in 2021. The bank even surpassed Vietcombank and Techcombank when reporting the pre-tax profit of VND38 trillion, four times higher than the year before, thanks to the sale of 50 percent of capital at FE Credit. 

Also at the shareholders’ meeting, Military bank approved the plan on increasing its chartered capital from VND37.783 trillion to VND46.882 trillion, an increase of VND9.1 trillion. 

The bank would continue to implement the plan on increasing the chartered capital by another VND892.4 billion approved by the 2021 shareholders’ meeting through the private offering (70 million shares) and ESOP (employee stock ownership plan) issuance (19.24 million shares). 

It would also deploy the 2022 plan on increasing chartered capital through the issuance of 755.6 million shares to pay dividends, and 65 million shares under private offering in 2022 and 2023.

Hoang Minh