Vietinbank's shareholders meeting on Sunday approved a proposal to increase the bank's charter capital from VND18 trillion (US$947.4 million) to VND20 trillion (just over $1 billion), as well as a plan to pay a dividend of 14-15 per cent.
To raise additional capital, the Ha Noi-based bank will issue 351.1 million new shares to existing shareholders at VND10,000 each.
The bank has also received in-principle approval to sell a 10-per-cent stake to the International Finance Corporation (IFC) in the third or fourth quarter of this year and was still waiting on approval to sell another 15 per cent to Canada's Nova Scotia Bank, with the possibility of increasing the stake to 20 per cent.
"The strategic investor desires to own the largest stake allowed and is seeking permission to buy Vietinbank shares on the HCM City Stock Exchange," Vietinbank chairman Pham Huy Hung told reporters on the sidelines of the general shareholders meeting.
At the meeting, Hung clarified for shareholders a rumours that the bank had suffered losses of millions of dollars by leasing land in the Ciputra project that was never conveyed.
"Vietinbank definitely has not suffered losses on the leased property," Hung said. "Since the project's developer, Citra Westlake Development Co., Ltd, has not conveyed the land, Vietinbank has paid only VND102 billion ($5.3 million). The remaining VND750 billion ($39.47 million) is being held in escrow at Vietinbank's Ha Noi branch."
In 2007, Vietinbank signed a contract with Citra Westlake to lease a 30,000sq.m building site over a 40-year period at $1,800/sq.m, totalling $54 million. After two years, however, no work has been done on the project and many have begun to wonder whether the bank were simply losing money on the leased land.
"The delays are because of Citra's failure to settle outstanding land clearance issues," said Hung. "Clearance will be finalised no later than June."
Vietinbank has signed London-based architects Forster & Partners to design the planned building, to be called Vietinbank Tower. The bank now expected to break ground on the project later this year or early next year.
Vietinbank posted a profit last year of over VND3 trillion ($157.89 million). As of December 31, 2009, it had total assets of VND240 trillion ($12.63 billion), an increase of 26 per cent over the previous year. Bad debts accounted for VND967 billion ($50.89 million), or 0.61 per cent, of total outstanding loans.
Shareholders this week approved a 6.83-per-cent dividend, to total VND769 billion ($40.47 million), on profits from the latter half of 2009.
For 2010, the bank has targeted a profit this of VND4 trillion ($210 million), up 18 per cent over last year, as well as total deposits up 20 per cent by the end of the year, and assets on December 31 of VND300 trillion ($15.78 billion), an increase of 20 per cent.