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In addition to setting relatively high profit targets in comparison with 2016, many banks are massively increasing their chartered capital in various forms.
In 2017 Annual General Meetings of Shareholders, many banks will submit capital increase plans to shareholders for approval.
Many banks are increasing chartered capital
On April 10th, 2017, ACB and VPBank held the 2017 Annual General Meeting of Shareholders. In addition to mentioning outstanding issues, the Boards of Directors of these two banks planned to increase chartered capital in 2017.
Specifically, the Board of Directors of ACB submited to shareholders the plan to increase chartered capital to VND 11,259 billion (rising by 20%). The bank will pay dividends to shareholders at the rate of 10% in shares to existing shareholders with the maximum number of nearly 98.6 million shares.
At the end of 2016, chartered capital of ACB reached VND 9,377 billion. In 2016, ACB was one of private commercial joint stock banks that had largest chartered capital.
Similarly, the Board of Directors of VPBank is planning to increase chartered capital to more than VND 14,000 billion. Currently, VPBank has VND 10,765 billion of chartered capital and VND 15,400 billion of equity.
In 2017, VPBank will need to add about VND 4,000 billion of chartered capital to meet the bank's operating needs and comply with safety ratios regulated by the State Bank of Vietnam.
VPBank will carry out 2 share issuance rounds to increase chartered capital. In the first round, VPBank will issue 329.4 million shares, thereby increasing its chartered capital to more than VND 14,000 billion.
In the second round, VPBank will issue up to 133.2 million shares (10% of common shares). And the selling price will not be lower than the book value of the Bank.
At present, chartered capital of VPBank is equivalent to ACB's. However, if the first share issuance round is successful, capital chartered of VPBank will be only lower than that of Sacombank, MBBank and SCB (Sai Gon Joint Stock Commercial Bank).
The Board of Directors of Techcombank aims to increase chartered capital in 2017.
Specifically, the Board of Directors of Techcombank aims to increase by VND 5,000 billion, from VND 8,878 billion to VND 14,000 billion. The bank will offer 500 million shares to existing shareholders.
It is expected that Techcombank will offer shares in the second or the third quarter of 2017.
Other banks such as Vietcombank, SCB, LienVietPostBank, BacABank, OCB plan to raise chartered capital in 2017. In 2016, chartered capital of most banks was increased significantly.
Increase capacity or ensure capital adequacy ratio?
Many are increasing chartered capital in 2017 to improve risk management capacity in banking operations; improve the capacity to invest in system development and expand branch network; and increase investment.
In addition, these banks aim to ensure capital adequacy ratios in accordance with regulations of the State Bank of Vietnam.
Mr. Dam Van Tuan, Deputy General Director of ACB, said that the increase in chartered capital will help increase the limit related to credit granting to customers; raise medium and long-term capital to finance credit activities.
Financial experts believe that raising chartered capital at banks is mainly aimed at ensuring the capital adequacy ratio in accordance with regulations.
Specifically, the current capital adequacy ratio as regulated by the State Bank of Vietnam is 8%.
According to Quang Thắng/ news.zing.vn

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Why are many banks massively increasing their chartered capital in 2017?

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In addition to setting relatively high profit targets in comparison with 2016, many banks are massively increasing their chartered capital in various forms. In 2017 Annual General Meetings of Shareholders, many banks will submit capital increase plans to shareholders for approval.

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Merger

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Franchise?