Vietnamplus

Banks are facing major challenges to carry out their capital increase plans this year due to the impacts of the COVID-19 pandemic.

Banks, especially State-owned banks, are expected to increase their capital significantly this year as they are allowed to retain profits or pay dividend in shares instead of cash as previously.

The Government’s plans to increase capital for large State-owned commercial banks in the first quarter of this year could be delayed due to the Covid-19 outbreak, analysts predicted.

The Government supports the policy of allowing four State-owned banks to raise charter capital, said Governor of the State Bank of Vietnam (SBV) Le Minh Hung.

Some experts have said when a bank is unable to have a minimum capital adequacy ratio (CAR) of 8 percent for a long time, it could be put under special control by the central bank.

Local banks have continued issuing a large amount of bonds to raise capital to meet the State Bank of Vietnam (SBV)’s stricter regulations on credit safety limits and capital adequacy.

Authorities have basically agreed on the State Bank of Vietnam (SBV)’s proposal to allow large State-owned commercial banks to retain their dividends or pay them in shares to increase capital.

Many banks have issued a large amount of bonds to raise capital in a move to meet high demand during year-end’s peak lending season and prepare to meet the State Bank of Vietnam (SBV)’s regulations on tightening the use of short-term funds for long-term loans from early next year.

The Government is directing ministries and agencies to raise capital for State-owned commercial banks through the use of dividends or share sales this year, Deputy Prime Minister Vuong Dinh Hue said at a recent meeting.

The Saigon – Hanoi Bank (SHB) plans to raise its charter capital by more than 1.2 trillion VND (52.8 million USD) to 13.24 trillion VND (582.56 million USD) in 2018.

Life insurer Manulife Vietnam has said that it has received approval from the Ministry of Finance to increase its chartered capital.

VPBank has successfully increased its charter capital to around 14 trillion VND (around 616.7 million USD).