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Thursday, October 29, 2020

Gov’t proposes raising chartered capital for Agribank

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HCMC – At the ninth sitting of the 14th National Assembly on June 8, the Government proposed to add a maximum of VND3.5 trillion to Agribank’s chartered capital to meet the capital demand for economic development plans.

Le Minh Hung, governor of the State Bank of Vietnam, was authorized by the prime minister to detail out a plan to spur the bank’s chartered capital to the National Assembly.

Hung said that Agribank is the commercial bank in which the State holds 100% of chartered capital, but over the past few years, the State has yet to increase its chartered capital.

Besides this, the rates of raising chartered capital have remained lower than the growth of total assets, leading to a decline in capital safety at the bank.

The bank’s chartered capital currently stands at VND30.6 trillion, while the rate of capital safety at Agribank is at a mere 6.9% in accordance with the Basel II capital standards, failing to meet the minimum capital requirement of 8%.

If Agribank does not increase its chartered capital this year, the bank will not meet the capital demand for economic growth and will fail to offer credit to the agriculture sector, according to the governor.

As such, the Government suggested that the National Assembly agree to add budget estimates for 2020 to spur Agribank’s chartered capital by a maximum VND3.5 trillion tapped from the increase in the 2019 budget collection.

Hung said that raising the chartered capital at Agribank is expected to help the bank meet the capital safety requirement and improve its financial capacity, the local media reported.

Apart from this, it will also boost the value of the bank, creating a more favorable condition for equitization, he added.

Vu Hong Thanh, head of the National Assembly’s Economic Committee, said that the committee agreed with the plan to raise the chartered capital of Agribank.

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