The State Bank also ordered its branches to strictly supervise the compliance of smaller banks, which must report progress to municipal central bank branches on a weekly basis. All branches must then report back to the central bank by December 12.
By the end of October, all 22 commercial banks not yet in compliance had received State Bank approval to increase register capital from an average of nearly VND1.6 trillion ($73.8 million) to an average of VND3.5 trillion ($166.7 million).
Eleven of these banks had received State Securities Commission approval to raise the additonal funds by offering shares.
With just one month to go, however, some market watchers believed that raising capital in this manner is unlikely at this time due to the gloomy state of the financial markets.
The director of the State Bank branch in HCM City, Ho Huu Hanh, told VNExpress that three banks in HCM City were facing difficulties raising sufficient capital after State shareholders withdrew their investment.
Navibank, for example, has been listed on the Ha Noi Stock Exchange since September under the code NVB, but its share price has fallen below the face value of VND10,000 to about VND8,000 per share, casting doubts on its ability to raise the funds needed to increase its charter capital from VND1 trillion to VND3 trillion.
State-owned garment maker Vinatex, which had held an 11-per-cent interest in Navibank, had complicated the matter further by recently withdrawing its investment in the bank.
DaiA Bank, VietA Bank, GiaDinh Bank and HDBank were all reportedly in similar predicaments.
With small commercial banks needing to attract an estimated VND30 trillion ($1.56 billion) in additional investment in order to survive, inter-investment among them may be the only option for survival, said Nguyen Van Thuan, head of the banking and finance department of HCM City Open University.
The State Bank has previously extended the deadline for commercial banks to meet the higher capital requirements. Commercial banks were required by law to register capital of at least VND1 trillion ($52 million) by the end of 2008, but only 28 banks had met the requirement by the deadline. Another 10 managed to meet it only as late as the end of 2009, with the central bank granting permission for the delayed compliance.
This time, however, the State Bank is saying the deadline is hard-and-fast because banks have had four years to prepare for the charter capital increase. The State Bank has vowed to close these banks down or force them into mergers with other institutions if they fail to meet the capital requirements by year's end.
The policy was aimed at eliminating weaker banks and strengthening the overall quality and security of the financial system.
Source: vnagency.com.vn
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