Vietnamese commercial banks have been seeking capital from overseas for the last two years.

If the four state invested banks cannot raise their charter capital, the safety of their operations will be affected, according to the Vietnam Banking Association (VNBA).

A bunch of Vietnamese banks are in the race to meet the requirements on capital adequacy ratio (CAR) following Basel II standards right in 2019, one year earlier than the deadline for implementation on January 1, 2020.

Experts can see high risks in using money from the state budget to increase the charter capital of state-owned banks.

Vietnam’s banks are having difficulties meeting Basel II standards, including the quality of database, the qualifications of staff, technology infrastructure, training, and budget for consultants.

Banks, which all reported big profits for 2018, are using the money to improve their financial capability.

After reaping high profits and gaining growth of 30-40 percent in 2017-2018, Vietnam’s commercial banks have become cautious about their business plans for 2019.

VietNamNet Bridge - Commercial banks will be under pressure to meet Basel II capital standards, which could prompt them to think of M&A (merger & acquisition) as a solution for growth.

VietNamNet Bridge - Analysts say the banking sector will attract huge foreign capital in 2019 as banks need to call for more capital.

VietNamNet Bridge - Four state-owned banks are known as the ‘big four’ with a large scale and profit. But private banks ‘made things happen’ in 2018.

VietNamNet Bridge - Vietcombank and VIB Bank have become the two first Vietnamese banks which have received approval from the State Bank of Vietnam (SBV) to apply Basel II standards.

More Vietnam’s commercial banks are entering regional markets. In the first 11 months of the year, Vietnamese enterprises registered $357.5 million worth of outward investment. Of this, $105.7 million was registered for banking projects. 

VietNamNet Bridge - While banks in other countries are following standards of Basel III, Vietnam has only two banks expected to be recognized as meeting Basel II standards in the time to come.

VietNamNet Bridge - While commercial banks in the world are changing fast to adapt to the 4.0 industrial revolution, Vietnam’s banks are still busy trying to raise capital.

VietNamNet Bridge - The credit growth rate this year is lower than 2017, but banks’ profit is predicted to be 20-25 percent higher.

The state-owned Vietcombank has received approval from the State Bank of Vietnam’s  to raise capital, while BIDV is stepping up implementation of a plan to issue shares to specific shareholders.

VietNamNet Bridge - The bad debt settlement process took a big leap after the National Assembly issued Resolution 42, giving more power to banks to collect debts.

VietNamNet Bridge - In the last two years, Vietnam saw many foreign finance institutions leaving Vietnam or scaling down their investment.

VietNamNet Bridge - Many banks have succeeded in scaling up their operation through M&As, but others have taken on new burdens.

VietNamNet Bridge - The prosperity of the stock market in 2017 and the first months of 2018 has helped banks increase accumulated capital.