The State Bank of Viet Nam will continue to encourage commercial banks to increase their charter capital as higher equity would provide banks with greater opportunities for development, according to a State Bank official.
He cautioned, however, that raising capital could also lower the ratio of earnings on equity and cause less impressive business results for commercial banks which last year were only able to pay dividends on shares of an average of just over 1%, lower than the interest rate they paid on deposits.
Banks entered a period of raising charter capital in the first quarter of this year, causing the State Bank to become more cautious about approving requests to amend capital in order to avoid negative consequences.
The State Bank recently approved three banks to increase their charter capital, including East Asia Bank, Eximbank and Sai Gon Commercial Bank (Saigonbank).
East Asia Bank raised charter capital from 880 billion VND (55 million USD) to 1.4 trillion VND (87.5 million USD) and issued 520 billion VND worth of shares to existing shareholders.
The bank has already proposed increasing its capital an additional time, to 2 trillion VND (125 million USD).
Saigonbank plans to issue 689.2 billion VND (43 million USD) worth of shares and increase its capital to over 1 trillion VND (63.8 million USD) this month. Shares will be sold at a ratio of 10:36 to existing holders, said Saigonbank general director Tran Thi Viet Anh.
Eximbank intends to issue about 1.6 million shares at the end of this month and increase chartered capital to 2.8 trillion VND (175 million USD). Of these 657,753 shares will be sold at a ratio 5:1 to existing holders.
Another 495,876 shares will be earmarked for strategic shareholders and the balance for employees. The bank will also issue 2.8 trillion VND worth of convertible bonds this year.
Source: VNA
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