The State Bank of Vietnam has recently agreed to allow some commercial joint stock banks to issue more shares to increase their chartered capital from now to the end of this year in order to further sharpen their competitive edge.

The banks in question, such as Lien Viet, Dong A, Phuong Nam, the Vietnam Technological and Commercial Joint Stock Bank, and the Vietnam Export-Import Commercial Joint Stock Bank, will up their chartered capital by between 270 billion VND and 2 trillion VND.

To put the plan into action, the banks will preferentially issue shares to their current shareholders rather than to the general public.

Economic experts say that the time is ripe for commercial banks to raise capital as the stock market has recently rallied, boosting shares, especially those of banks– some of which now fetch double what they did three months ago.

They have also highlighted that many banks have reaped a six-month profit that exceeded their planned target, resulting in high dividend payouts, which makes bank shares especially attractive to investors at this time.

To sweeten the deal, atop issuing shares to shareholders, nearly all the banks have guaranteed a dividend payout rate that will exceed deposit interest rates, to ensure the profitability of the shares.

At the same time, some major foreign financial institutions, including HSBC, ANZ and the Standard Chartered bank, have expressed their eagerness to increase their stake in local banks or accelerate the tempo of expanding their operations in Vietnam .

“The personal banking segment in Vietnam has significant growth potential as less than 10 percent of Vietnam ’s population have a bank account. With the establishment of our new transaction offices, HSBC bank in Vietnam will be able to penetrate further into the retail market,” said Lyndsay Rajah, Head of Personal Financial Services of HSBC bank (Vietnam)./.