According to the HCM City Branch of the State Bank of Vietnam, all the banks have drawn up the plans to increase chartered capital which have been approved by the shareholders’ meeting. Most of the banks plan to issue shares to existing shareholders and staffs to increase chartered capital, while some others are hurrying to seek domestic and foreign strategic partners to sell stakes.

Gia Dinh Bank, for example, now has one trillion dong in chartered capital, and the bank plans to raise the capital to two trillion dong by August and to three trillion dong by November. In the first phase, the bank will issue 94.6 million shares to existing shareholders, while in the second phase; it will issue 100 million shares, also to existing shareholders.

Nam A Bank hopes that it will be able to raise the chartered capital from 1200 billion dong now to 2 trillion dong in the second quarter of the year and to three trillion dong by the end of the year, also by issuing shares to existing shareholders.

Leader of a joint stock bank which now has one trillion dong in chartered capital believes that it will succeed in issuing shares to existing shareholders at the price of 10,000 dong per share. Shareholders will purchase all the shares because they believe that the share prices will increase when the bank goes public on the stock market.

Analysts say that bank shares nowadays are not popular, and that they are not considered as ‘king shares’ like two years ago. In fact, the prices of some banks shares have decreased.

Analysis director of a securities company also said that the investment in small banks proves to be risky until banks can prove their capability.

Hoang Thi Hoa, Head of the Analysis Division of the Ban Viet Securities Company, thinks that investors may consider the profit growth rates of the banks and the dividends they paid to make decision on whether to inject more money in the banks.

However, even when banks have high profit growth rates, in some cases, their return on equity (ROE) is not high, which means that their profit is small when compared with their stockholder equity.

Regarding the dividends, small banks can commit the dividends of 12 percent at maximum, while some banks pay 6-7 percent, which clearly is not attractive dividend and lower than that of bigger listing banks.

For that reason, analysts say, it will not be easy to persuade existing shareholders to spend more money to purchase more shares, even when they can purchase the shares at the prices just equal to the face value.

In principle, banks can look for foreign strategic partners to sell stakes to them. But it’s not that easy these days. Since the beginning of the year, Vietnam has witnessed only one case, when VIB Bank sold 15 percent of its stakes to Australian Commonwealth Bank.

Banks will not only have to raise their chartered capital to three trillion dong by the end of the year, but they will have to continue to raise chartered capital to five trillion dong by 2012 and 10 trillion dong by 2015, if the draft decree on the legal capital of banks compiled by the State Bank is approved by the Government.

Source: Thoi bao Kinh te Saigon