Banks draw up capital raising plans for 2009

VNStockNews.com - Most banks now are planning to increase capital within this year and those with chartered capital of one trillion dong are trying to call for additional capital contribution from shareholders to finish the plan. Many banks passed a chartered capital higher 2-3 times than the current level.

On March 31, the shareholders’ meeting of HCM City Housing Development Commercial Joint Stock Bank (HDBank) decided to scale up its chartered capital from 1.550 trillion dong to three trillion dong. Thus, in 2009, the bank’s capital will be increased by 1.450 trillion dong. First off, HDBank adjusted the chartered capital up to two trillion dong by issuing shares to the existing shareholders. After that, calling for capital from strategic shareholders will be considered.

The extra capital will be invested in upgrading technology and diversifying products based on modern technologies, which will open more opportunities for developing credit activities with a year-on-year growth of 42% to 7.677 trillion dong. Also, the bank will continue pumping capital into effective businesses. On the other hand, HDBank plans to establish member companies or contribute capital in setting up joint stock companies like securities arm, fund management company, or financial leasing firm. Total capital for these investments is estimated to account for 40% of the bank’s chartered capital.

Similarly, Tien Phong Commercial Joint Stock Bank or TienPhongBank has recently approved the plan of offering more shares to hike capital from the current one trillion dong to two trillion dong in 2009 and three trillion dong by 2010 aiming to meet the government’s Decree No 141 on capital increasing roadmap as for credit institutions. Increased capital of TienPhongBank will be invested in fixed assets and network expansion.

Apart from small sized banks, big banks also continued drawing up the capital-raising project within 2009. Typically, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) will raise its chartered capital from 5.116 trillion dong to 6.7 trillion dong, Vietnam Eximbank plans to submit the capital increase plan to the shareholders’ meeting in April.

Extra capital mainly is set for investing in infrastructure, technology and credit development. Sacombank will spend 295 billion dong on technological upgrade, 75 billion dong on purchasing equipments for card operation, 600 billion dong on network expansion and 600 billion dong on supplementing chartered capital of member companies, and the remaining 16 billion dong will be used to develop credit to reach the credit growth target of 50% in this year.

However, the additional share issuance of banks will be hard to succeed in the context that the economic difficulties are forecasted to last until the end of 2009. Also, the profitability of extra capital will be harder compared to 2007 and 2008 when a lot of lenders had earned a high profit from capital business via the interbank market with the overnight lending rate jumping to around 30% per annum.

Credit activity currently seems to be brisker than the year early but the prolonged difficulties of global economic crisis made enterprises feel very hesitant in accessing bank loans. As reported by HCM City Statistic Office, the total outstanding loans of the city’s banks in Jan-March only grew by 2.4% from the start of this year. (DTCK)