HANOI: While private joint stock commercial banks have increased capital significantly so far this year, the capital for state-owned commercial banks has remained stagnant.

According to the latest data from the State Bank of Vietnam (SBV), by the end of June 2024, the capital of private banks was double that of state-owned banks.

State-owned commercial banks have total charter capital of nearly 228.23 trillion dong or about US$9.18bil, an increase of 4.75% compared with the end of 2023, while private joint stock commercial banks have a total charter capital of 587.85 trillion dong, an increase of 8.35% compared with the end of 2023.

Joint stock commercial banks can easily implement capital increase plans using their shares, while state-owned commercial banks have to go through many rounds of approval to get the go-ahead from authorities on any planned capital increases.

This has resulted in state-owned banks seeing much lower capital than private joint stock commercial banks.

Statistics showed that the leader of the entire banking system in charter capital is currently VPBank, a private bank with charter capital of nearly 79.34 trillion dong.

Techcombank, another private bank, follows in second place with charter capital of 70.45 trillion dong.

Meanwhile, state-owned BIDV, Vietcombank and VietinBank ranked third, fourth and fifth with charter capital of more than 57 trillion dong, 55.89 trillion dong and nearly 53.7 trillion dong, respectively.

Banking and finance expert Dr Le Xuan Nghia said there should be a long-term capital increase strategy for state-owned commercial banks.

According to Nghia, if capital is increased, state-owned commercial banks – which are the main force for reducing interest rates to support people and businesses after disasters – can pump more capital into the economy to help with a faster recovery. More capital will contribute more to the economy.

State-owned banks have also proposed plans to increase charter capital by issuing individual shares.

Earlier this year, Vietcombank planned to issue 6.5% of its capital in private shares, while BIDV set a target of issuing 9%.

The deal is expected to bring each bank more than US$1bil. However, according to information from MBS Securities Co, the plans have been postponed until 2025 due to unfavourable macroeconomic conditions.

The situation is even worse for state-owned Agribank.

According to Agribank’s leaders, to gain a credit growth of 10% in 2025, Agribank will need to receive additional charter capital of 10 trillion dong from the state.

Faced with difficulties in annual capital increases, leaders of state-owned banks have proposed that the government and the National Assembly have a long-term mechanism so that they can increase capital sustainably and more proactively.

 - ANN