Vietnamese commercial joint stock banks are striving to accelerate their chartered capital to at least VND1 trillion (US$62.5 million) each in order to well prepare for the country’s long-waited WTO membership, which is expectedly due at the end of this year.
Some banks plan to double their current chartered capital. Among them, the Vietnam Technological and Commercial Joint Stock Bank (Techcombank), for example, is expected to raise its chartered capital to VND 1.5-1.687 trillion (US$93-$106 million) in November from VND830 billion (US$51.9 million) currently.
Meanwhile the Southern Commercial Joint Stock Bank (Southern bank) schedules to scale up its chartered capital to VND1.430 billion ($89 million) from VND600 billion ($37.5 million); the Vietnam Export Import Bank (Eximbank) to VND1,200 billion ($75 million) from VND815 billion ($51 million).
In addition, the Saigon Industrial and Commercial Joint Stock Bank (Saigonbank) projects an issuance of VND1 trillion ($62.5 million) worth of convertible bonds from November 1 to push up its chartered capital by VND 770 billion ($48 million) to VND1.3 trillion.
Explaining for such a move, Techcombank’s vice general director, Luu Duc Khanh said the country’s WTO entry is coming around the corner and the competition among banks will become increasingly tougher, especially after April 1, 2007 when 100 per cent foreign-owned banks are allowed to set up in Vietnam.
Therefore, local banks have no ways but to raise more funds to invest in equipment, technologies and services and to satisfy rising loan demand.
Furthermore, the banks also need to expand its networks and market shares before Vietnam’s WTO accession.
A financial expert stressed that the State Bank of Vietnam (SBV) has recently required the domestic banks to increase their capital scopes to improve their financial capacity and lift prices of their shares offered to foreign investors. However, the central bank also warned that the local banks should carefully consider partners in terms of capacity and strategies, particularly foreign investors, before selling stake.
According to the International Monetary Fund (IMF), in 2008, Vietnamese banks should reach the capital adequacy ratio (CAR) of 8 per cent under the international rules otherwise they will face big risks.
Under current laws, a new commercial bank must have minimum chartered capital of VND77 billion ($4.8 million).
Investment
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