Commercial banks race to increase charter capital

Hanoi (VNA) - Commercial joint stock banks in Vietnam are in a rush to
increase their charter capitals to meet the government's deadline for them
on minimum charter capital by late this year.

The Government's Decree No. 141, issued in 2006, required that all
commercial joint stock banks must have a minimum charter capital of 1,000
billion VND by December 31, 2008 and 3,000 billion VND by December 31, 2010.

At present, many commercial joint stock banks, including Dai A, Thai Binh
Duong, Dai Tin, Gia Dinh, Kien Long, De Nhat, Bac A and My Xuyen, are yet to
meet the required level, but all of them have had specific plans to increase
the charter capital, including issuing shares for strategic partners,
existing shareholders, and staff.

The Global Petrol Commercial Joint Stock Bank (PG Bank) has approved its
2008 charter capital increase plan with the support from its two large
shareholders, namely the Vietnam National Petroleum Corporation (Petrolimex)
and the Saigon Securities Company. The Kien Long Commercial Joint Stock Bank
(Kienlong Bank) has planned to sell 42 million shares, with 40 million
offering to existing shareholders and 2 million for the bank's staff.
The De Nhat Bank has submitted to the State Bank of Vietnam a plan to
raise its charter capital to 1,000 billion VND from the current 600 billion
VND while the Dai A Bank is preparing to sell shares to its existing
shareholders.

Meanwhile, small-sized banks and those have just transformed from rural to
urban commercial joint stock banks are forecast to face difficulties in
raising their charter capitals due to the slowdown trend of the stock
market, which makes potential investors to think twice about pouring their
money into banking stocks.

However, raising charter capital is still considered one of the most
effective measures to raise banks' capacity and competitiveness under
increased pressure from foreign banks. Therefore, many commercial banks,
which have already met the capital requirement, have also embarked on
large-scale expansion plans.

The Vietnam Technological and Commercial Bank (Techcombank) has completed
its second plant within this year to raise its capital from 2,524 billion
VND to 3,165 billion VND. Meanwhile, the Asian Commercial Bank (ACB) has
received approval for its plan to raise charter capital to over 5,800
billion VND, making it the second largest commercial joint stock bank in
Vietnam in terms of charter capital, after the Bank for Foreign Trade of
Vietnam (VCB).-