Six Vietnam commercial banks to raise their charter capital

Six Vietnamese commercial banks, namely ACB, SHB, LPBank, NCB, Vietcombank, and Agribank, are poised to increase their charter capital, aiming to augment their financial capacity and become more competitive.

In the latest instance, the Asia Commercial Joint Stock Bank (ACB) issued a resolution Friday to adjust its charter capital from VND33.77 trillion ($1.4 billion) to more than VND38.84 trillion ($1.65 billion).

ACB had earlier issued 506,615,264 shares to pay a 15% dividend in 2022, thereby expanding its charter capital by VND5.07 trillion ($214.86 million). After the issuance, the total number of outstanding shares of ACB increased from 3,377 million to 3,884 million shares.

On the Ho Chi Minh City Stock Exchange (HoSE) the ACB share closed Friday at VND22,050 ($0.94).

Saigon-Hanoi Bank (SHB), one of the top private banks in Vietnam, will increase its charter capital from VND30.67 trillion ($1.3 billion) to VND36.65 trillion ($1.56 billion), maintaining its position as a top five Vietnamese private bank in terms of charter capital.

On June 15, the State Bank of Vietnam (SBV) approved SHB's proposal to issue shares to pay an 18% dividend to existing shareholders for 2022, and to issue shares under the Employee Stock Ownership Plan (ESOP).

The increased charter capital will improve the bank's financial capacity and competitiveness as the country furthers its international economic integration, while meeting the expectations of shareholders, SHB said.

On the HoSE, the SHB share closed Friday at VND12,500 ($0.53).

Early last month, LPBank, formerly known as LienVietPostBank, received approval from the central bank to raise its charter capital from VND11.39 trillion to VND28.68 trillion ($1.22 billion).

To facilitate the move, the private bank, listed on the HoSE as as LPB, will issue 328.5 million shares to pay dividend, offer 500 million shares to existing shareholders, organize a private placement of 300 million shares for foreign investors, and issue 10 million shares under the employee stock ownership plan. The plan was approved at LPB’s 2023 annual general meeting in April.

The LPB share closed Friday at VND15,150 ($0.64).

Meanwhile, the National Citizen Bank (NCB) in April approved a plan to issue a maximum 620 million shares via private placement for VND6.2 trillion ($262.4 million) to increase its charter capital to VND11.8 trillion ($503.3 million).

Under the plan, adopted at the bank’s annual general meeting of shareholders, the share issuance would be completed in three years, or by 2025.

The issuance will be made at least six months apart from the end of the latest, with the offering price not lower than VND10,000 ($.0.43) per share.

NCB chairwoman Bui Thanh Huong said the bank has chosen private placement instead of a public offering in order to attract strategic investors with financial strength, technology and experience and long-term commitments. The bank was eyeing the partnership of Japanese and British shareholders, she said.

“The capital increase aims to have more funds for network development, business site relocation and technology improvement; and increase financial capacity to meet international standards,” she added.

State-owned banks

In May, the SBV allowed state-controlled Vietcombank to raise its charter capital from VND47.33 trillion to VND55.89 trillion ($2.38 billion).

Listed on the HoSE as VCB, the bank will issue nearly 856.6 million shares to pay an 18.1% dividend (a shareholder holding 1,000 shares will receive 181 shares).

With this move, Vietcombank will surpass VietinBank and BIDV, two other “Big 4” banks, to become the second-largest bank in terms of charter capital after VPBank.

The VCB share dipped 0.53% to VND100,000 ($4.24) when the HoSE closed Friday.

Also in May, the National Assembly Standing Committee okayed a plan for wholly state-owned Agribank to increase its charter capital by VND17.1 trillion ($729 million).

The government proposed that the additional capital will be drawn from the state budget.

SBV 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 below several 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.