Proposal for Vietcombank to increase charter capital to more than 83,000 billion VND

This afternoon (October 23), Deputy Prime Minister and Minister of Finance Ho Duc Phoc, authorized by the Prime Minister, presented to the National Assembly a Report on the policy of additional State capital investment at the Joint Stock Commercial Bank for Foreign Trade of Vietnam ( Vietcombank , VCB).

The Deputy Prime Minister said that the additional investment of State capital at VCB from the remaining profit in 2021 is very necessary to realize the policies of the Party and the National Assembly on improving the efficiency and competitiveness of State-owned enterprises to play a leading and pivotal role in a number of important fields, contributing to promoting the socio- economy and the process of industrialization and modernization of the country.

This is also consistent with the banking industry development strategy to 2025, with a vision to 2030, the Project on restructuring the system of credit institutions associated with bad debt settlement in the period 2021-2025; helping VCB improve its financial capacity to strive to reach out to the region and be in the top 100 largest banks in Asia; affirming the leading role in the banking and finance industry according to the orientation of the Party and Government .

In addition, the additional investment of state capital at VCB aims to meet the minimum capital safety ratios as prescribed; help VCB have the potential to implement state policies and support the economy such as credit policies for agricultural and rural development; interest rate support policies; provide credit for many important national projects with particularly large capital needs and fulfill obligations to the state budget.

Regarding authority, VCB proposed to invest additional state capital in the amount of VND 20,695 billion. Pursuant to Article 17 of Law 69/2014/QH13, with this additional state capital investment, the National Assembly will have the authority to decide on the investment policy. On that basis, the Prime Minister will issue a decision on capital investment.

Deputy Prime Minister and Minister of Finance Ho Duc Phoc. (Photo: National Assembly).

Deputy Prime Minister and Minister of Finance Ho Duc Phoc also reported to the National Assembly on the plan to invest additional state capital in VCB, the financial situation, business results of VCB, the current status of equity capital and equity capital needs of VCB, VCB's capital increase plan and additional investment sources of the State. Accordingly, from the urgent need for equity capital mentioned above, VCB has studied sources of additional equity capital such as issuing shares to individual investors, issuing bonds and issuing shares to pay dividends.

However, in the current context, issuing shares to individual investors and issuing bonds to increase capital is not feasible. Therefore, at this time, VCB proposes to allow the use of remaining profits after tax and provision to increase charter capital through the form of paying dividends in shares.

According to VCB's report, VCB's remaining profit after setting aside funds and paying cash dividends by the end of 2018 and remaining profit in 2021 is VND 27,702 billion (equivalent to 49.564% of charter capital).

VCB proposes to increase its charter capital from the above sources with the amount of VND 27,666 billion (to ensure the rounding rate of 49.5%). The remaining profit of VND 36 billion will be added to the following issuances). VCB's current charter capital is VND 55,891 billion. After the issuance of an additional VND 27,666 billion, VCB's charter capital is VND 83,557 billion.

With this plan, the profit to be distributed to State shareholders in shares is VND 20,695 billion. This is considered as the additional State capital investment in VCB. The above figures have been confirmed by the Auditor when auditing VCB's 2023 Financial Statement. Therefore, the Government agrees that the additional State capital investment in VCB is VND 20,695 billion.

Regarding the plan to use the increased charter capital, Mr. Ho Duc Phoc said that the entire additional charter capital will continue to be used as capital for VCB's business operations, investment in development and digital transformation; towards the common goal of improving financial capacity, striving to ensure the capital safety ratio CAR according to Basel III; expanding the scale of operations, modernizing the bank; completing the goals according to the Banking Industry Development Strategy to 2025, with a vision to 2030 and the Project "Restructuring the system of credit institutions associated with bad debt settlement in the period 2021-2025"; implementing the policies of the Party, State and Government in supporting the economy and businesses.

The Deputy Prime Minister requested the National Assembly Standing Committee to consider and submit to the National Assembly for approval the policy of additional investment of State capital to maintain the State capital contribution ratio at VCB at VND 20,695,100,980,000 from stock dividends distributed to State shareholders from the remaining accumulated profit up to the end of 2018 and the remaining profit in 2021 of VCB.

Representative of the inspection agency, Chairman of the National Assembly's Economic Committee Vu Hong Thanh said that the Economic Committee agreed with the necessity of additional investment of State capital in Vietcombank for the reasons stated in the Government's Submission and accompanying documents to institutionalize the Party's policy and the National Assembly's Resolution.

The majority of opinions in the Economic Committee suggested clarifying the structure of using additional capital invested at VCB on the basis of ensuring suitability and consistency with the purpose of additional investment of State capital. In particular, the focus is on expanding business activities, providing credit to priority sectors and fields, large-scale national important projects; implementing policies of the Government and the State Bank in the direction of reducing the mobilization interest rate level, lending interest rate, supporting enterprises, households, individuals in production and business...

The Economic Committee agreed with the Government's proposal to include the content of additional State capital investment at VCB in the Resolution of the 8th Session, 15th National Assembly (similar to the case of additional charter capital for the Vietnam Bank for Agriculture and Rural Development in the Resolution of the 5th Session, 15th National Assembly).

Chau Anh

Source: https://vtcnews.vn/de-xuat-cho-vietcombank-tang-von-dieu-le-len-hon-83-000-ty-dong-ar903429.html