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| BIDV leaders proposed to increase capital to increase financial resources and ensure capital adequacy ratio. |
Urgently increase capital for state-owned commercial banks
Speaking at a recent conference on implementing banking tasks in 2023, Pham Quang Dung, Chairman of the Board of Directors of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), said that the bank is completing the restructuring plan for the 2021-2025 period, which is essentially Vietcombank’s development strategy to 2025, with a vision to 2030, with a vision to maintain its position as the No.1 bank in Vietnam and one of the 100 largest banks in Asia.
Therefore, Vietcombank determined one of the solutions is to increase capital and improve financial capacity; strictly control credit portfolio quality. Striving for the capital adequacy ratio to be at least 10% by 2023, and at least 11% by 2025.
But to achieve these goals, Vietcombank’s leaders recommend continuing to give priority to increasing charter capital for state-owned commercial banks in the context of the scale of charter capital and capital adequacy ratio of commercial banks. The state is still at a very modest level compared to development needs as well as international standards.
Vietcombank asked the Prime Minister for approval to allow the increase of charter capital from the remaining profit of 2019 and 2020 after setting aside funds. In 2023, Vietcombank plans to consult the SBV to submit to the General Meeting of Shareholders to continue increasing charter capital using all remaining accumulated profits of 2021 and previous years.
Similarly, Phan Duc Tu, Chairman of the Board of Directors of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) also suggested the Government, the Ministry of Finance, and the State Bank of Vietnam (SBV) continue to allow commercial banks to increase charter capital from after-tax profits, after setting aside funds in 2022 in the spirit of Resolution 43/2022/QH15 dated January 11, 2022 of the National Assembly, to increase financial resources and ensure capital adequacy index for state-owned commercial banks.
On the side of the Bank for Agriculture and Rural Development (Agribank), the leaders of this bank said the problem is that the charter capital is low, so according to the regulations, with the current credit scale, Agribank is no longer guaranteed minimum capital adequacy ratio for credit growth. Therefore, in 2022, Agribank’s credit growth is only low compared to the system average.
Pham Duc An, Chairman of Agribank’s Board of Directors, said that providing charter capital for Agribank is very urgent for the bank to ensure the minimum capital adequacy ratio for credit growth right from the beginning of 2023, serving the capital needs of the economy, especially in the field of Tam Nong.
Therefore, the President of Agribank proposed that the Government should proceed with an advance to provide charter capital for Agribank of VND 6,753 billion, which has been approved by the National Assembly to provide charter capital for Agribank.
Regarding the increase of capital for Agribank, a representative of the Vietnam Banks Association also said that Agribank’s charter capital is already close to the allowed threshold, if not increasing charter capital will limit both capital mobilization and lending activities.
Reducing medium and long-term capital pressure for banks
In addition to the recommendations on raising capital, state-owned commercial banks also expect the macro-economy to be managed synchronously, control and improve the operational quality of the stock market, especially the stock market and corporate bond market, ensuring that the stock market is a major medium and long-term capital channel of the economy to meet the investment and production needs of enterprises, share and reduce capital pressure for the commercial banking system.
Pham Duc An also suggested that the Government and ministries need to have a program to support and control the real estate market to avoid a crisis, because otherwise it will have negative consequences for other industries. The government also needs to have a mechanism to control the operation of private enterprises with a large mobilized capital utilization coefficient.
Phan Duc Tu suggested the Government direct the local ministries and sectors to fully implement the commitments signed with credit institutions and investors, creating confidence for investors and credit institutions, domestic and foreign financial institutions participating in PPP projects.
Meanwhile, Vietcombank’s leaders asked the State Bank to consider allowing state-owned commercial banks to be proactive in their annual credit growth scale on the basis of meeting regulations on safety limits and ratios in operation according to national and international standards. This person explained state-owned commercial banks are limited by the size of charter capital, so it certainly does not affect the management of the State Bank.