National Assembly rejects bank capital hike proposal
National Assembly rejects bank capital hike proposal
The National Assembly (NA) has rejected a proposal to use the State budget to raise charter capital for the four State-controlled banks. 
The proposal was presented by the NA Economic Committee Chairman Vu Hong Thanh on Monday as a part of the socio-economic development plan for 2020.
The proposal was rejected and excluded from the socio-economic development plan for 2020, which was approved by the NA deputies the same day.
According to the NA Standing Committee, using the State budget to raise capital for the four banks is an important issue and needs to be discussed and assessed by the NA.
The four banks targeted by the proposal are the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and the Vietnam Bank for Rural and Agriculture Development (Agribank).
The State Bank of Vietnam (SBV), on behalf of the State, currently holds 74.8 per cent of capital in Vietcombank, 64.46 per cent in Vietinbank and 81 per cent in BIDV.
Meanwhile, fully State-owned lender Agribank is preparing to launch its IPO in the near future.
Total charter capital of the four banks was up 0.8 per cent from January to August to VND139 trillion (US$6 billion). Their total assets rose 5.3 per cent during the period to VND5.08 trillion and total lending was VND3.65 trillion. Their assets and lending accounted for 43 per cent and 48 per cent of the whole banking sector.
The proposal was discussed at the previous NA month-long meeting in May.
According to SBV Governor Le Minh Hung, increasing the four banks’ charter capital would help them keep their leading role amid the volatility of the financial and monetary markets.
The charter capital hike would also ensure the banks meet the capital adequacy ratio (CAR) standard regulated by Basel II.
To implement Resolution 42 on handling non-performing loans and the plan on restructuring the financial institutions, the SBV proposed the NA issue a policy allowing the use of the State budget to increase capital for the four State-controlled banks.
