At the 2019 Annual general Meeting of Shareholders of Vietnam International Joint Stock Commercial Bank (VIB) on March 28, its shareholders have approved its 2019 capital plan.
Accordingly, the bank will increase its charter capital to a maximum of 10.908 trillion dong in 2019, an increase of 3.074 trillion dong. In particular, the maximum capital increase will be 1.410 trillion dong, equivalent to 18 percent of the charter capital before increasing through bonus shares to existing shareholders. The remaining 1.664 billion dong, equivalent to 18 percent of its charter capital before offering and after increasing capital from additional bonus shares, will be issued through private placement.
For private placement, VIB may issue new shares to investors, and/or issue private placement of convertible bonds to investors to increase charter capital within the scope of this capital raising plan.
Its Board of directors will actively carry out the preparation, investor selection, and capital increase and report to the shareholders in 2019.
With more than three trillion dong of additional capital this year, VIB intends to spend more than two trillion to provide credit to corporate and individual customers with stable financial situation, development potential and within the priority areas of the government. 800 billion will be used to invest in liquidity assets, particularly liquid government bonds, as part of the balance sheet structure. The remaining amount will be invested in technology and network.
In addition to raising tier one capital, VIB’s shareholders’ general meeting also approved the plan of issuing international bonds, including bonds to raise tier two capital, with a maximum value of 12 trillion dong, equipvalent to $500 million. It authorised the Board to decide the contents and procedures related to the issuance of bonds in accordance with the law and market practices.
Thus, with these plans, the bank’s tier one and tier two capital of this year will be increased to 15 trillion dong. It is a small number in the context that banks are ‘craving’ for capital to ensure the capital adequacy ratio (CAR) according to Basel 2 standards as well as other regulations of the State Bank of Vietnam, including the ratio of short-term capital for medium and long-term loans. With abundant capital, the bank will surely push its business activities to achieve the goal of minimum profit of 3.4 trillion dong as the bank chair shared with shareholders.
