NCB – Opportunities and challenges for capital hike
At the 2019 annual general meeting on April 26, 2019, shareholders of NCB passed a plan to raise its capital to over VND7 trillion within this year and then to over VND10 trillion by 2020. The scheme will be implemented by offering new shares to international and local investors, employee stock ownership plan (ESOP) shares and convertible bonds.
In the next one year, local banks will have to meet the capital safety requirements provided by the State Bank of Vietnam’s Circular 41, the first pillar of Basel II. Therefore, most lenders are racing against time to boost their capital.
Aside from meetingthe standards specified in the circular, new capital injections will help banks develop credit products, invest in facilities and information technology, and expand operation networks.
Many banks have announced their capital increase plans. Bank for Foreign Trade of Vietnam(Vietcombank) at the annual general meeting on April 26, 2019 presented a plan to inject over VND14.8 trillion through either a private placement or bonus share and share dividend payments.
Meanwhile, the Bank for Investment and Development of Vietnam (BIDV) is offering 603 million shares to its foreign strategic shareholder KEB Hana Bank, with the transaction scheduled for completion within 2019. Besides this, small lenders NamABank and SeABank have plans to raise capital to VND5 trillion and over VND9 trillion, respectively.
NCB is also working on its capital hike plan to meet the requirements of the State Bank of Vietnam, which wants to apply international standards to guarantee the health of the local banking market.
However, NCB is facing multiple challenges because it is expecting to make a breakthrough – reaching foreign partners to improve shareholder capability – and bring the bank to the next level – being one of the banks with a medium capital level in Vietnam.
This is part of NCB’s strategy, which focuses on upgrading infrastructure, investing in information technology, developing digital banking, expanding network and strengthening risk control.
In 2019, NCB has become one of the attractive destinations for local and foreign investors thanks to the positive outlooks of the economy and the banking market, effective policies of the Government and the central bank in bad debt settlement, macroeconomic management and the restructuring of banks. The context brings both opportunities and challenges to the bank to make a breakthrough with suitable strategy in the coming time.