Crucial issues related to Vietnam Construction Bank (VNCB) will be decided at a general meeting slated for this weekend, including the central bank’s plan to convert VNCB into a wholly State-owned bank.

If such a plan is passed, VNCB would be the second institution to be 100% owned by the State after the agriculture bank Agribank.

A source close to the matter told the Daily that at the general meeting this Saturday, the bank’s management would call for more capital contributions to raise chartered capital to VND3 trillion as required by the central bank’s regulations.

The central bank will make it a 100% State-owned bank if shareholders do not want to contribute more capital.

According to the source, so far no shareholders have expressed interest in injecting more capital into VNCB as it will take a long time for the bank to get out of the doldrums. As a result, the central bank has prepared a plan to restructure the bank.

Its current financial situation cannot allow it to operate like other banks, and calling for new investors to restructure the bank is tough, the source said.

If so, this will be the first time the central bank directly intervenes in restructuring a bank through acquisition.

Under the Prime Minister’s Decision 48/2013/QD-TTg with effect from September 20, 2013, the central bank can buy stakes at banks under special supervision, which is also one of the solutions of the banking system restructuring scheme approved last February.

VNCB was formerly known as Trustbank. The bank was renamed in May 2013 after capital injections by Thien Thanh Group and new shareholders. The involvement of Thien Thanh Group was also part of a plan to restructure weak banks as Trustbank was one of the banks forced to be restructured.

Nevertheless, in late July last year Ministry of Public Security police detained VNCB’s then chairman Pham Cong Danh and the bank’s then general director Phan Thanh Mai for allegedly violating State regulations on economic management causing serious consequences at Thien Thanh Group.

Trustbank was founded in 1989 as a rural bank and based in Long An Province. From 2007, it became an urban bank.

As of late 2011, its total assets were estimated at VND28 trillion and chartered capital at VND3 trillion. The bank posted pre-tax profit of VND550 billion that year.

According to Ngan, this year’s inflation is forecast at 4-5% and mobilization rates are estimated at 5-6%, which are already low. However, there is still scope for lending rates to decline if the central bank takes bold moves to support enterprises. For instance, the central bank can lower the rediscount rate from the current 4.5% to 3.5-4% and then push the lending rates down to 6-7%.

The central bank’s recent report said that though the borrowing rates, as of December 19 last year, dropped by 1.5-2 percentage points per year, capital mobilization still inched up 15.15%. Liquidity at credit institutions was abundant, and the inter-bank rates remained at low levels.

The lending rates also fell by around two percentage points last year, bringing the interest rates down below the levels in the 2005-2006. Credit growth was recorded at 11.8% as of December 19 last year.