Banks accelerate capital hikes amid Basel III push

Banks accelerate capital hikes amid Basel III push

In a strategic move to strengthen financial resilience and align with global risk management standards, Vietnamese banks are ramping up their charter capital through stock dividends and share issuances.

The surge in capital-raising activity marks a pivotal shift in the sector’s competitive landscape, as regulatory pressures intensify under the roadmap to Basel III compliance.

Southern lender OCB plans to issue more than 197 million shares to boost its charter capital at an issuance ratio of 8 per cent, meaning shareholders holding 100 shares will receive eight new shares.

The capital source will be the bank’s equity as of December 31, 2024, as determined by audited separate and consolidated financial statements after allocations to regulatory reserves.

Similarly, early this month Hanoi-based Saigon-Hanoi Bank (SHB) approved a plan to raise its charter capital by issuing shares as dividends to existing shareholders, sourced from 2024 profits.

Accordingly, the bank will issue up to nearly 528.5 million shares, equivalent to a 13 per cent issuance ratio, meaning 13 new shares for every 100 shares owned. These additional shares will not be subject to transfer restrictions.

Meanwhile, VietABank finalised the list of shareholders on August 15 to issue bonus shares for raising charter capital from owner’s equity.

The bank plans to issue over 276 million shares to existing shareholders, at a ratio of 100:51.19, meaning every 100 shares will receive 51.19 new shares. Any fractional shares will be cancelled.

The capital for this issuance will come from retained earnings approximating $104.2 million as of December 31, 2024, and the charter capital reserve fund of approximately $6.4 million.

After the issuance, VietABank’s charter capital will increase by around $110.6 million – from approximately $216 million to $326.6 million.

In the first half of 2025, the banking sector has seen growth in both the size and rankings of charter capital. Strong momentum from major players suggests that the race to raise capital is reaching its peak, driven in part by increasing pressure to meet Basel III standards.

As of the end of the second quarter of 2025, the top 10 banks in terms of charter capital include Vietcombank, VPBank, Techcombank, BIDV, MB, VietinBank, ACB, SHB, HDBank, and LPBank.

In terms of growth rate, 10 banks saw charter capital increases by the end of June. Among them, leading state lender Vietcombank posted the strongest growth at 49.5 per cent, raising its charter capital $2.24 billion to $3.34 billion, PGBank recorded a 19 per cent hike.

BVBank, Bac A Bank, and SeABank also experienced changes in capital scale, with their charter capital reaching $248.3 million, up 12.5 per cent; $383.2 million, up nearly 7 per cent; and $1.14 billion, up 0.4 per cent, respectively, as of the end of June.

With the State Bank of Vietnam's (SBV) roadmap to increase the minimum Capital Adequacy Ratio (CAR) to 10.5 per cent by 2033, raising charter capital is no longer a choice but a regulatory requirement for banks.

The robust actions taken since early 2025 reflect the urgency with which banks are working to strengthen their internal capacity, position themselves for market competition, and meet international risk governance standards.

On June 30, the SBV issued Circular No.14/2025/TT-NHNN, stipulating capital adequacy ratios for commercial banks and foreign bank branches.

The circular provides guidance on determining and maintaining minimum capital adequacy ratios, including the Common Equity Tier 1 (CET1) ratio, Tier 1 capital ratio, and minimum total CAR. Specifically, commercial banks without subsidiaries and foreign bank branches must maintain separate ratios of at least 4.5 per cent for CET1, 6 per cent for Tier 1 capital, and 8 per cent for overall CAR.

For commercial banks with subsidiaries, both standalone and consolidated ratios must meet the same respective thresholds. Circular 14/2025/TT-NHNN also introduces, for the first time, regulations on capital buffers, including the Capital Conservation Buffer (CCB), Counter-Cyclical Capital Buffer (CCyB), and buffers for important commercial banks in the banking system.

The circular will take effect from September 15.

Nguyen Huu Huan, senior lecturer at University of Economics, Ho Chi Minh City, commented that compared to Basel II, Basel III introduces more stringent and comprehensive requirements. Implementing Basel III will require substantial financial resources as well as thorough preparation from the banks.

"These developments reflect the banking sector’s determination to adopt international standards, contributing to enhanced efficiency and greater capital safety," he said.

VIR