Agribank gets green light to raise charter capital by $729 mln

The National Assembly's Standing Committee has okayed a plan for wholly state-owned Agribank to increase its charter capital by VND17.1 trillion ($729 million).

As proposed by the government, the additional capital for the bank will come from the state budget.

The State Bank of Vietnam's Deputy Governor Doan Thai Son said that as of December 31, 2022, Agribank's charter capital was the lowest among the four state-owned commercial banks in Vietnam, and even below some private banks.

"If Agribank is not allowed to increase its charter capital, it will not be able to ensure its key role in the domestic banking market, especially as it operates mainly in the agricultural and rural sectors," he added.

Chairman of the National Assembly Economic Committee Vu Hong Thanh said that the committee basically agreed with the necessity of a charter capital hike for Agribank to help it achieve a capital adequacy ratio of 8% and climb higher in global credit ratings.

The committee also agreed with the government's proposal to provide VND17.1 trillion ($729 million).

However, it asked for clarification on the feasibility of the proposal in the context that the economy and business operations are facing many difficulties, while Agribank's state budget contribution, revenue, and profits this year may not meet expectations.

Another question remains about the bank's ability to meet the capital adequacy ratio requirement after the National Assembly green-lights the capital hike proposal.

National Assembly Vice Chairman Nguyen Duc Hai asked for relevant documents to be completed for appraisal before they are submitted to the National Assembly for approval at its upcoming meeting.