In the context of only one year to the effective date of the Circular 41 issued by the State Bank of Vietnam (SBV) requiring capital adequacy ratios according to Basel II standards, banks are currently working hard to increase their capital.
In addition to the pressure in implementing and complying with Circular 41, the capital raise also boosts credit development. At the same time, banks will carry out their plans to invest in infrastructure, technology systems and expand the operation networks.
Therefore, recently, a series of banks have announced the plan to increase capital such as Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) that submitted to the general Meeting of shareholders the plan to continue to increase capital by more than 14.8 trillion dong in the form of private issuance, bonus share distribution or stock dividend payment. Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) is also offering 603 million shares to foreign strategic shareholder KEB Hana Bank and expects the deal to be completed in 2019. In addition to the two “big guys”, small banks such as Nam A Joint Stock Commercial Bank (Nam A Bank) and Southeast Asia Joint Stock Commercial Bank (Seabank) increase their capital to five trillion dong and over nine trillion dong respectively this year.
With National Citizen Bank (NCBstock code: NVB), the capital-raising plan is also included in the general roadmap according to SBV’s management requirements with the aim of applying international standards to heal strong operations of the financial market. Specifically, on February 12, 2019, NCB was approved by the State Securities Commission to register to offer shares publicly to its existing shareholders and employees to increase charter capital from 3.01 trillion dong to over five trillion dong.
Then, on April 26, 2019, at the Annual general Meeting of Shareholders in 2019, shareholders also officially approved the plan to increase NCB’s chartered capital to over seven trillion dong in 2019 and continue to rise above 10 trillion dong for the next period to 2020 through various forms including issuance of new shares to domestic and foreign investors, to employees and issuance of convertible bonds.
Through the above roadmap, it can be seen that this bank is expecting to achieve a breakthrough when it comes to foreign partners to increase shareholder capacity and move to a group of banks with medium capital.
This step is probably in the business strategy of NCB when concentrating all resources to upgrade infrastructure; modernising information technology; developing digital banking; expanding the network as well as enhancing risk management and governance.
In 2019, positive forecasts on the economic situation and banking market along with a series of effective policies of the government and SBV in dealing with bad debts, macro management and the banks’ restructure process have helped banks like NCB become an attractive destination for domestic and foreign investors.
This is both a chance and a challenge for this bank to transform and break through with appropriate business and management strategies in the near future.
