VietNamNet Bridge – A series of commercial banks tasted the failure when implementing their plans to raise chartered capital in 2013.

The anticipated failure

A commercial bank in 2013 showed its strong determination to raise the chartered capital to VND3.7 trillion within the year. But its plan failed completely: the capital of the bank by the end of 2013 remained unchanged at VND3 trillion.

Nam A, Viet A and Ocean Bank also still cannot fulfill the plans to raise the chartered capital, though the plans were improved by the shareholders.

Bankers have blamed the failure on the gloomy stock market. However, experts said banks should blame themselves if they did not succeed with the plans.

The experts pointed out that banks once successfully raised the chartered capital from VND1 trillion to VND3 trillion as requested by the State Bank in 2008-2010, when the stock market was also pale. Meanwhile, they cannot do this now, under the same conditions of the market.

Explaining this, a banking expert said banks could increase their chartered capital in 2008-2010 because they successfully “dodged” the laws. Investors made capital contribution into each others’ banks, thus creating the banks with the chartered capital high enough to meet the requirements set by the State Bank.

As such, the increased chartered capital only exists on paper, which is the “virtual” capital, not the real money.

But nowadays, when the State Bank takes drastic measures to settle the “cross-ownership” problem, banks find it more difficult to “dodge” the laws to create more “virtual” capital.

Therefore, experts keep doubtful about the statements by some commercial banks that they would continue the plans to increase capital this year.

Nguyen Dinh Tung, General Director of Ocean Bank, which plans to raise its chartered capital to VND4.2 trillion, said on Thoi bao Ngan hang that it would be still very difficult for banks to increase capital in 2014.

“The stock market is believed to be warmer in 2014, while investors tend to diversify their investment portfolios, while bank shares would be a good choice for the investors. But I think that investors would be very cautious when making investments,” he commented.

“Silence is golden”

Local newspapers have found out a lot of problems in the ownership ratios in Vietnamese commercial banks.

Tram Be and his family members, for example, now hold 20.81 percent of the chartered capital of Southern Bank, while the Law on Credit Institutions stipulates that the proportion must not be higher than 20 percent, while an individual must not hold more than 5 percent of a bank’s stakes.

However, the State Bank still keeps silent about the law violations. Commenting about this, an expert said “silence is golden”. The State Bank well understand that it cannot do anything to “punish” the violators, because it is very difficult to sell bank stakes to withdraw capital, or increase chartered capital at this moment.

Dau tu chung khoan has quoted Gene Fang, Vice President of Moody’s as saying that the Vietnamese banks’ capital is not likely to be improved in the next two years.

Kim Chi