>> Central Bank takes steps to stabilize gold market
>> The capital market, a major source of financing for the private sector
>> Individual deposits reach record level in January and July
| According to the latest data from the State Bank of Vietnam, as of the end of June 2024, the capital of private banks was double that of public banks. |
| Photo : VNA/CVN |
According to the latest data from the State Bank of Vietnam (SBV), as of the end of June 2024, the capital of private banks was double that of public banks. Public commercial banks have a total registered capital of nearly 228.23 trillion VND, an increase of 4.75% compared to the end of 2023, compared to 587.85 trillion VND for private commercial banks, +8 .35%.
Joint-stock commercial banks can easily implement capital increase plans using their shares, while state-owned commercial banks have to go through numerous approval rounds to get the green light from authorities. This means that public banks have much lower capital than private joint stock commercial banks.
Statistics show that the leader of the entire banking system in terms of registered capital is currently VPBank, a private bank with registered capital of nearly 79.34 trillion VND. Techcombank, another private bank, follows in second place with VND70.45 trillion. State banks BIDV, Vietcombank and VietinBank ranked third, fourth and fifth with more than 57,000, 55,890 and nearly 53,700 billion VND of registered capital, respectively.
The Dr. Lê Xuân Nghia, an expert in banking and finance, said there should be a long-term capital increase strategy for state-owned commercial banks. According to Lê Xuân Nghia, if capital is increased, state-owned commercial banks – which are the main force in reducing interest rates to support people and businesses after disasters – can inject more capital into the economy to help to a faster recovery. More capital will contribute more to the economy.
| State-owned banks including Vietcombank have proposed plans to increase registered capital by issuing individual shares. |
| Photo : VNA/CVN |
State-owned banks have also proposed plans to increase share capital by issuing individual shares. Earlier this year, Vietcombank planned to issue 6.5% of its capital in private shares, while BIDV set a target of issuing 9%. The deal is expected to net each bank more than USD 1 billion. However, according to information from securities company MBS, the plans were postponed to 2025 due to unfavorable macroeconomic conditions.
The situation is even worse for Agribank, a state-owned bank. According to Agribank executives, to achieve credit growth of 10% in 2025, Agribank will need to receive additional share capital of 10,000 billion VND from the state.
Faced with difficulties, state bank leaders proposed that the government and the National Assembly should have a long-term mechanism to increase capital in a sustainable and more proactive manner.
“We hope that the government will submit to the National Assembly a policy allowing the application of a mechanism to increase the annual share capital of Agribank from the bank’s profits from 2024. Instead of contributing to the budget of the State, Agribank will be able to keep the profits to increase the capital”said Agribank President Pham Duc An.
VietinBank proposed that relevant authorities approve a policy allowing the bank to retain all of its annual profits for five years, from 2024 to 2028, to increase its capital, improve its financial capacity and increase credit growth.
VNA/CVN
