Hanoi (VNS/VNA) - State-owned banks are findingit more difficult to increase charter capital, especially when they still haveto pay dividends instead of keeping the money for this purpose.

It is estimated that the State budgetwill get an additional nearly 6.1 trillion VND (268.7 million USD) from thedividend payout of three State-owned banks – VietinBank, Vietcombank and BIDV –by the end of October this year.

VietinBank recently announced itwill pay cash dividend to shareholders for 2016. The payment rate will be 7 percent, meaning that for each share, shareholders will receive 700 VND on oneshare holding. At this rate, the bank will pay dividend worth 2.6 trillion VND for 3.72 billion shares held by the stakeholders.

Of the total dividend, State capitalrepresentative State Bank of Vietnam, which holds 64.46 percent ofVietinBank’s charter capital as of June 30, 2017, will receive 1.68trillion VND. Bank of Tokyo-Mitsubishi UFJ, VietinBank’s strategic investor, will get 514 billion VND, thanks to its ownership of 19.73 percent of VietinBank’scharter capital. 

Previously, Vietcombank’s board ofdirectors also approved to make an 8 percent dividend payout on October16. The bank will pay shareholders 800 VND per share. With nearly 3.6 billionshares listed on the HCM Stock Exchange, the value of the dividend payout willreach nearly 2.9 trillion VND.

SBV is also the largest shareholder ofVietcombank, owning more than 2.77 billion shares, or 77.1 percent of thebank’s charter capital. The second-largest shareholder is Japanese Mizuho BankLtd, which owns nearly 540 million shares, or 15 percent of the bank, whileother shareholders own total 7.89 percent of the bank’s capital. Thus, theState will receive more than 2.2 trillion VND from Vietcombank once the bankcompletes its dividend payout while Mizuho Bank Ltd will collect 431.7billion VND.

With these dividend payout plans, thethree banks will contribute nearly 6.1 trillion VND to the State budget thisyear. However, the banks will face difficulties as they cannot keep the moneyto increase charter capital to meet BASEL II standards as regulated by thecentral bank. According to statistics, the capital adequacy ratio (CAR) of thethree banks is at 9 percent; however, the ratio will drop to below 8 percent if BASEL II is applied in the country by 2020.

Besides, following the first half ofthis year, all three banks had total assets exceeding 1 quadrillion VND. Therapid increase in assets means the banks have to increase ownership equityquickly to ensure CAR does not fall below the safety margin.Therefore, if thegroup of banks fails to increase capital, it will result in a strong negativeimpact on the credit growth plan of the group as well as the credit expansion ofthe whole banking sector, according to an SBV official who declined to benamed.

In fact, the three banks have tried toincrease capital in the past but failed. Vietcombank could not sell more than 7percent of its capital to foreign counterparts due to the high market prices,even as investors buying large lots always want cheap prices. BIDV also failedto find a partner to sell up to 30 percent of its stake as scheduled whileVietinBank has not yet completed its merger with PG Bank due to certain issues,including swap rates.

This year, BIDV and Vietcombank alsoapproved capital increasing plans of 13 percent and 10 percent to 38.63trillion VND and 39.57 trillion VND, respectively, at their annual general meetings.However, so far, no further information on the issue has been published.

According to experts, banks findit difficult to find additional capital sources, especially in the context thatforeign investors are not too keen on contributing capital to do business withVietnamese banks as they can do business on their own in the form of branchesor wholly-foreign owned subsidiaries. Besides this, the Government is alsourging State-owned groups and corporations to accelerate the withdrawal ofcapital from the banking sector. Therefore, banks will face more challenges toincrease the capital as they still have to pay dividend.-VNA