Business

New decree allows banks to keep profits

A new decree released by the Government will allow State-owned commercial banks to save cash to increase their strength instead of paying dividends to shareholders.
New decree allows banks to keep profits ảnh 1A Vietcombank office in Bac Ninh province. (Photo: VNA)

Hanoi (VNS/VNA) - A new decree released by the Government will allowState-owned commercial banks to save cash to increase their strength instead ofpaying dividends to shareholders.

Decree121/2020/ND-CP will amend Decree 91/2015 dated October 13, 2015 regulating theState capital invested in State-owned companies and management of State capitaland assets in the business.

The newpolicy allows government agencies to increase the State capital in joint stockcompanies and limited-liability firms with two or more board members.

Commercialbanks with the State holding more than 50 percent of the charter capital aresubject to the new decree.

Under thenew decree, the three large-cap State-owned banks – the Vietnam Joint StockCommercial Bank for Industry and Trade (Vietinbank), the Joint Stock CommercialBank for Foreign Trade of Vietnam (Vietcombank), and the Joint Stock CommercialBank for Investment and Development of Vietnam (BIDV) – are now able to keepand use their profits to increase capital instead of paying cash dividends toshareholders.

In recentyears, the State Bank of Vietnam (SBV) – representing the Government tomonitor the State capital in financial-banking firms – asked the three banks topay cash dividends, but the request was always rejected by othershareholders.

The SBV isholding nearly 81 percent in BIDV, more than 64 percent in Vietinbank, andnearly 75 percent in Vietcombank.

Vietinbankand Vietcombank planned to issue bonus shares using their profits recorded in2020 to increase capital, meeting BASEL II standards, preparing for anyeconomic shocks caused by the prolonged COVID-19 pandemic and the instabilityof the global economy.

At itsannual shareholders’ meeting on April 23, Vietinbank decided to use theremaining post-tax profits during 2017-19 to issue bonus shares and increasecapital. The issuance rate has not been selected.

Vietcombankhas planned to issue bonus shares at the rate of 18 percent in the secondsix-month period of 2020, meaning every shareholder will receive 18 new sharesfor each 100 shares they have. The time has not been decided yet.

According toVietinbank Chairman Le Duc Tho, the adjustment of the Decree 91/2015/ND-CP iskey to the development of the bank as the plan on using 2017-2018 profits toincrease capital has already been approved by the Government./.
VNA
#Government #State-owned commercial banks #Decree 121/2020/ND-CP #Decree 91/2015 #Vietnam #VietnamPlus #Vietnam news
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