VietNamNet Bridge - Of the three state-owned banks, the largest in the economy, BIDV has the lowest CAR (capital adequacy ratio). There is still room for foreign investors in the bank, but the bank has found it difficult to seek foreign strategic investors in the last few years.


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Analysts say that Vietnamese commercial banks need to improve capital urgently. 

The latest report of the State Bank shows that the CAR of the entire banking system is 12.73 percent. However, the ratio of state-owned banks was low at 9.48 percent by the end of September, while the figure was 12.1 percent for joint stock banks.

Increasing chartered capital is an urgent task for banks, especially as banks have to apply Basel Accords 2.

Of the three state-owned banks, the largest in the economy, BIDV has the lowest CAR (capital adequacy ratio). There is still room for foreign investors in the bank, but the bank has found it difficult to seek foreign strategic investors in the last few years.

Among joint stock banks, ACB and Eximbank have high CARs with decreased assets, while MBBank increased its capital last year. 

As for state-owned banks, Vietcombank bears the least pressure because it has many options for raising capital while the time is not limited. 

Meanwhile, Vietinbank needs to improve its CAR soon and increase tier-1 capital more than tier-2 capital.

Of three state-owned banks, BIDV has the lowest CAR. It has no more room to increase tier-2 capital, therefore, it has the fewest options for raising capital. 

As the government has decided not to pump more capital into state-owned banks, it still requests the banks to raise capital to satisfy requirements in Basel 2. Private capital will play the key role.

Increasing capital by using undistributed profits is not a feasible solution. BIDV has recently announced that it will pay dividends in cash instead of shares as initially planned and it is highly possible that VietinBank will make the same decision. 

The announcement was made after the Ministry of Finance opposed VietinBank’s decision on not paying dividends for 2015 and BIDV’s decision on paying dividends in shares (8.5 percent).

Will the banks be able to issue additional shares to increase their charter capital? 

If yes, the state ownership ratios in the banks will be lower than the current 95.28 percent in BIDV, 77.1 percent in Vietcombank and 64.46 percent in VietinBank.

With the foreign ownership ratio nearly hitting the ceiling of 30 percent and the state ownership ratio of 64.46 percent, VietinBank won’t be able to issue more shares to investors unless the state lifts the ceilings.

Vietcombank’s plan to issue 10 percent of tier-1 capital to GIC still has not received approval.

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