Vietcombank received a long-awaited approval from the State Bank of Viet Nam late last week to increase its charter capital from VND12.1 trillion (US$636.84 million) to VND13.2 trillion ($694.73 million).
"Getting this permission is great," Vietcombank executive board member Le Thi Hoa told Viet Nam News, noting the raft of troubles the bank had faced since its equitisation in 2007, including a failure to obtain a foreign strategic partner and falling stock prices.
"Vietcombank is waiting for directions from the State Bank's Ha Noi Branch, and we will then start working with the State Securities Committee," Hoa said. "We have already sent a prospectus and relevant documents to the commission, but it is waiting on our audited 2009 financial statements."
Vietcombank expected to issue its finalised statements, audited by KPMG, within the next few days, she said.
The Ha Noi-based bank has sought State Bank approval since last November but has been refused on multiple occasions, prompting its chairman, Nguyen Hoa Binh, at one point to comment, "We can't figure out what the real reason is!"
Under Official Document No.2307 sent by the State Bank's Ha Noi branch to Vietcombank last December 16, one reason given for the denial was that Vietcombank had not yet found a foreign strategic investor. But Vietcombank countered that it had done everything required under Government Decision No 109.
There was also a rumour that the bank's capital adequacy ratio might have fallen below 8 per cent – the ideal ratio directed by the central bank – relative to Vietcombank's charter capital of VND12.1 trillion ($636.84 million).
Vietcombank was the first State-owned bank to equitise, making its initial public offering on December 26, 2007. At that time, Vietcombank sold 97.5 million shares at an average price of VND107,860 ($6.70) per share. The shares sold in the IPO represented only 6.5 per cent of the equity in the bank.
The bank has spent the past two years searching for a foreign strategic investor, after which it would list shares on the stock exchange.
"We really wanted to target several outstanding financial institutions, not funds, although these banks often express their interest in Vietcombank only to then say they lacked the capital to make such a deal," Hoa said.
Vietinbank followed Vietcombank to equitise in 2008 but has already inked deals with two foreign strategic investors.
Vietcombank earned VND5.15 trillion ($271.10 million) in 2009, up 46.2 per cent from the previous year, and posted a combined profit of VND5.5 trillion ($289.47 million). Credit grew by 25.9 per cent during the year.
As of December 31, 2009, the bank had bad debts of 2.54 per cent of its total outstanding loans, while deposits totalled VND255.9 trillion ($13.46 billion), up 16.4 per cent from 2008.
In order to increase earnings this year, Vietcombank is considering additional capital expenditures of VND500 billion ($26.31 million) to promote new sources of credit and VND323 billion ($17 million) to enhance infrastructure and human resources.