Government to allocate $192m for Cooperative Bank capital increase

Government to allocate $192m for Cooperative Bank capital increase

The government has proposed a budget allocation of VNĐ5 trillion (US$192.15 million) to increase the charter capital of the Cooperative Bank (Co-opBank).

Nguyễn Thị Hồng, governor of the State Bank of Vietnam speaks at a session of the National Assembly’s Standing Committee on Saturday. — VNA/VNS Photo

Speaking at a session of the National Assembly’s Standing Committee on Saturday, Nguyễn Thị Hồng, governor of the State Bank of Vietnam (SBV), said the Co-opBank is facing a capital shortfall of about VNĐ5 trillion, hindering its ability to support the credit fund system.

Currently, Co-opBank’s total assets exceed VNĐ61.707 trillion, while its charter capital is nearly VNĐ3.030 trillion, the lowest in the banking system, she added.

The bank, which operates as a cooperative credit institution, relies on state support for 99.34 per cent of its capital, she added.

"The Co-opBank plays a vital role in financial support and liquidity for nearly 1,200 people’s credit funds, particularly in the agriculture sector," according to Hồng.

Hồng said that it was necessary to increase the bank’s charter capital to ensure financial stability and liquidity, especially during peak borrowing periods. 

The proposal is aimed at enhancing the bank’s capital adequacy ratio, currently hovering between 9.2 per cent and 9.7 per cent.

However, Phan Văn Mãi, chairman of the NA's Economic and Financial Committee, said that the government’s proposal lacks clarity on how the additional funds will be utilised.

Vũ Hồng Thanh, vice chairman of the National Assembly, said, while increasing Co-opBank’s capital is necessary, the decision-making authority rests with the government, not the National Assembly. 

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