Increasing capital by 5,000 billion VND for Cooperative Bank: Not under the authority of the National Assembly, source of arrangement is unknown

Governor Nguyen Thi Hong presented the Government 's proposal to consider and decide on supporting VND5,000 billion in state capital to increase charter capital for the Cooperative Bank of Vietnam.

In the review report, the Standing Committee of the Economic and Financial Committee stated that increasing the charter capital for the Cooperative Bank (CB) is necessary to institutionalize the Party's policies, and at the same time, in accordance with the requirements of the National Assembly's resolutions; supporting the CB to ensure the minimum capital safety ratio, performing well the role of supporting, regulating, balancing capital, and ensuring the safe operation of the people's credit fund system. The consideration of state capital support to increase the charter capital for the CB has a legal basis.

However, the Standing Committee of the Economic and Financial Committee said that, according to the provisions of the Law on Public Investment 2024, the proposed capital level mentioned above (VND 5,000 billion) does not belong to the level of an important national project, therefore, it is not under the authority of the National Assembly to decide on investment policy but under the authority of the Government.

According to the Economic and Financial Committee, the Government's proposal has not clearly identified the ability to balance and arrange capital to increase charter capital for Cooperative Banks, but only proposed that the National Assembly approve the policy of supporting state capital to increase charter capital for Cooperative Banks with an amount of VND 5,000 billion from the central budget's development investment expenditure source. According to Official Dispatch No. 5931/BTC-TCNH dated June 7, 2024, the Ministry of Finance commented that the synthesis and arrangement of the annual state budget estimate for this task can be implemented as early as the 2025 estimate. However, at the 8th Session, the National Assembly passed Resolution No. 159/2024/QH15 on the state budget estimate for 2025.

Chairman of the Economic and Financial Committee Phan Van Mai

Therefore, although agreeing with the policy of considering state capital support to increase charter capital for Cooperative Banks, which has a legal basis, the Standing Committee of the Economic and Financial Committee recommends that the Standing Committee of the National Assembly consider assigning it to the Government.

In his concluding remarks, Vice Chairman of the National Assembly Vu Hong Thanh said that increasing the charter capital for the Cooperative Bank is necessary, helping this bank to meet the minimum capital safety requirements and perform well its role of regulating and ensuring capital safety for nearly 1,200 People's Credit Funds.

However, the support capital of 5,000 billion VND as proposed by the Government is not at the level of an important national project, so it is not under the authority of the National Assembly to decide on the policy, but under the authority of the Government. Therefore, the Vice Chairman proposed that, on the basis of clearly identifying the source and balancing the capital, the Government consider increasing the charter capital for this bank.

"In addition to capital support from the budget, the State Bank needs to have solutions to increase the operational efficiency of cooperative banks," the Vice Chairman suggested.

According to the Government's submission, as of December 31, 2024, the charter capital of the Cooperative Bank was only VND 3,029 billion (state support capital accounted for 99.34%), approximately equal to the legal capital (the legal capital is VND 3,000 billion), the lowest in the banking system, less than 1/15 of the charter capital of state-owned commercial banks, only 38.5% of the charter capital and 1.5% of the total assets of the QTDND system.

As the focal unit of the system (1,200 People's Credit Funds ), the Cooperative Bank not only ensures safety ratios for itself but also ensures safety for the entire People's Credit Fund system.

However, the current minimum capital adequacy ratio (CAR) of Cooperative Banks is still low compared to the average of the banking industry, much lower than the capital demand required to carry out the goals, responsibilities and tasks assigned by the State. Up to now, Cooperative Banks have not been able to implement CAR according to the provisions of Circular No. 41/2016/TT-NHNN20 but are implementing according to the provisions of Circular No. 22/2019/TT-NHNN21 (minimum CAR is 9%). By March 31, 2025, the CAR of Cooperative Banks is 10.3%, down 1.8% compared to the end of 2024.

To ensure the CAR target of 13.5% by 2026, the equity capital as of December 31, 2026 is VND 9,419 billion (corresponding to the expected scale of risky assets of VND 69,768 billion). The equity capital of the Cooperative Bank as of December 31, 2026 (in case the charter capital is not increased) is VND 4,416 billion 26. Accordingly, the Cooperative Bank determines the equity capital shortage to be VND 5,000 billion. The Cooperative Bank proposes to receive capital support from the State budget to increase the charter capital to compensate for the above equity capital shortage.

The Government proposed that the National Assembly consider and decide on supporting VND 5,000 billion of state capital (from the central budget's development investment expenditure source) to increase charter capital to improve the financial capacity of the Cooperative Bank and include it in the General Resolution of the National Assembly session.

Source: https://baodautu.vn/tang-von-5000-ty-dong-cho-ngan-hang-hop-tac-xa-khong-thuoc-tham-quyen-quoc-hoi-chua-ro-nguon-bo-tri-d273524.html