Major State-owned banks propose raising charter capital
Major State-owned banks propose raising charter capital
Four major State-owned banks have proposed the Government allow them to increase their charter capital, noting that a delay may hinder their ability to supply funds for the economy.
At a conference today, January 2, on the banking sector’s plans this year, Phan Duc Tu, chairman of the Bank for Investment and Development of Vietnam, suggested the Government allow the bank to increase its charter capital by issuing more shares. Besides this, procedures for the issuance of shares for existing shareholders and employees should be simplified, news site Vietnamplus reported.
Nghiem Xuan Thanh, chairman of the Bank for Foreign Trade of Vietnam, also proposed the Government create favorable conditions for commercial banks, especially State-owned ones, to raise their charter capital by using their capital surplus and after-tax profits. The Government should also work out policies to encourage the participation of foreign investors in the local banking system by raising the foreign ownership cap at local banks.
Moreover, the Government and the relevant ministries and agencies should quickly complete the amendment of Decree 91/2015/ND-CP on the investment of State capital in enterprises and the management and use of capital and assets at enterprises so that banks with State capital can raise their charter capital and meet Basel II standards, stated Le Duc Tho, chairman of the Vietnam Bank for Industry and Trade.
The Vietnam Bank for Agriculture and Rural Development (Agribank), which has the lowest charter capital among the four State-owned banks, will mobilize resources for equitization, complete its restructuring plan and meet bad debt settlement targets this year, remarked Agribank General Director Tiet Van Thanh.
If the bank is not allowed to raise its charter capital or apply special policies, it may face difficulties in expanding credit and supplying capital for the economy, Thanh added.
Therefore, Thanh asked the Government and the State Bank of Vietnam (SBV) to provide VND19.8 trillion (US$854.8 million) in charter capital for Agribank as previously proposed.
In response, SBV Governor Le Minh Hung explained that the SBV will coordinate with the Ministry of Finance to submit plans to raise the charter capital for State-owned banks to the Government.
With Vietnam being added to the United States’ list of countries being monitored for possible currency manipulation, Hung confirmed that the central bank would never use the exchange rate to compete with the country’s trade partners or abuse monetary policies to ease trade activities.
Amid international market volatility, the SBV has flexibly managed the central reference rate, thus stabilizing the local market.
Vietnam's foreign reserves has amounted to more than US$79 billion. In 2019, the central bank bought nearly US$20 billion and contributed VND19.5 trillion to the State budget, the governor noted.
As for plans for this year, the central bank is targeting a 13% growth rate for all modes of payment and credit growth of 14%.
The SBV will also research and propose solutions to settle bad debts at credit institutions in the 2021-2025 period, keeping the bad debt ratio below 2%.
