On the morning of April 27th, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) organized the 2024 Annual General Meeting of Shareholders (AGM).
During the meeting, in response to a question from a shareholder about the process of receiving the transfer of a weak bank, General Director Nguyen Thanh Tung said that the bank has completed the plan and is submitting it to the State Bank of Vietnam (SBV) for approval. According to the plan being implemented, it will be in 2024. In preparation, Vietcombank has had specific solutions, is not passive, and ensures smoothness and following the roadmap. The bank has established a professional sub-committee to review internal regulations and has detected more than 300 gaps (gaps, deficiencies). Currently, there are only 20 gaps in the process and regulations.
Vietcombank also organized a sub-committee to review the network, assess the quality of human resources of managers and employees, identify gaps in qualifications and expertise, and develop training programs to quickly integrate according to standards. The bank also established a sub-committee to review support solutions for wholesale and retail to weak commercial banks receiving the transfer.
Regarding information technology, Vietcombank has sent experts to work with weak commercial banks to assess quality and capacity, and has solutions to improve quality, ensure continuous operation, and minimize risks. Vietcombank is a bank playing a key role of the Government, the State Bank of Vietnam is responsible for handling weak commercial banks, contributing to ensuring the stability and efficiency of the banking system. Ensuring the entire system will ensure the safety of each organization. There will be appropriate support solutions in accordance with legal regulations, limiting the impact.
“In the long run, receiving weak banks creates opportunities for Vietcombank to have many options such as selling shares, merging, …”, said Mr. Tung.
Speaking more about the benefits Vietcombank has received, Mr. Do Viet Hung – a member of the Board of Directors said that the bank will be granted a higher credit growth limit, as stipulated by the 2024 Law on Commercial Banks. In addition, the organization receiving the transfer will have the right to decide and handle the organization that is required to transfer: if a suitable foreign organization is found, it can sell the organization receiving the transfer, maintain it, or have other options such as conversion, reform (such as switching to digital banking).
“The progress of the transfer depends on the decision of the Government and the State Bank of Vietnam. It is expected that the transfer will be carried out in 2024”, said Mr. Hung.
Panorama of the 2024 Annual General Meeting of Shareholders.
Previously, at the 2022 Annual General Meeting of Shareholders, Vietcombank asked for and was approved by shareholders for the policy of participating in the restructuring of a weak credit institution in the form of a mandatory transfer (CGBB).
According to the report presented at the meeting at that time, Vietcombank said that the participation in this restructuring is in line with the Government’s policy, the State Bank of Vietnam (SBV), and legal regulations, contributing to the healthy and stable development of the banking sector and the economy; at the same time creating opportunities to bring benefits to shareholders.
Accordingly, this activity will allow Vietcombank to expand its business scale, customer base, network… and can receive mergers or continue to maintain. Specifically, Vietcombank will be subject to support measures in accordance with the Law on Credit Institutions, regulations of relevant laws approved by competent authorities in the CGBB Plan, including:
Vietcombank is given priority to approve loans exceeding 15%/25% of Vietcombank’s charter capital for customers and customer groups related to Vietcombank; providing medium and long-term loans in foreign currencies for key projects; increasing market share to serve international credit projects for Vietcombank throughout the period when the commercial bank has not eliminated accumulated losses;
In addition, the State Bank of Vietnam does not limit Vietcombank’s annual credit growth if Vietcombank meets the capital safety ratio as prescribed; Vietcombank is allowed to issue long-term bonds to the Vietnam Deposit Insurance Corporation immediately after receiving the CGBB commercial bank; Vietcombank is entitled to dividends in shares from all remaining profits after setting aside funds to increase charter capital (during the years of handling accumulated losses of the commercial bank); Vietcombank is allowed to open additional branches/transaction offices in all provinces and cities with a minimum number of state-owned commercial banks with the lowest number of branches/transaction offices in the area.
In addition, Vietcombank is not subject to the restrictive conditions in transactions with the CGBB receiving commercial bank as a subsidiary of VCB, transactions related to assets with the commercial bank are applied a risk coefficient of 0% when calculating the safety ratio and classified into the group of eligible debts, …
The board of directors, Vietcombank has not officially announced the bank that the bank will receive a mandatory transfer, but the leader of Construction Bank (CBBank) said that it will transfer to Vietcombank.
Besides, Vietcombank is also currently providing loans and comprehensive support to CBBank, from changing management models, technology systems, to product and service systems and brand image…
Sharing at this year’s general meeting of shareholders, Deputy General Director Phung Nguyen Hai Yen also said that since 2015, Vietcombank has provided technical support to CBBank. Currently, the technical support plan for the bank has been implemented. In 2022, Vietcombank provided a loan of 10,000 billion VND and 6,700 billion VND in 2023. According to regulations, the loan is classified into group 5. In the first quarter, after the repayment, the balance of these loans has decreased to 1,000 billion VND.
