Recently, Saigon – Hanoi Commercial Joint Stock Bank (SHB) successfully issued more than 500 million shares, thereby raising its charter capital to VND 17,558 billion and its equity to nearly VND 34,000 billion. This is the basis for the bank to complete all the pillars of Basel II in 2020, affirming and improving its reputation with domestic and foreign investment community as well as international credit rating agencies.
With the approval of the State Bank of Vietnam and the State Securities Commission, SHB successfully issued more than 500 million shares to increase its charter capital to VND 17,558 billion, of which, from February 17, 2020 to April 27, 2020, SHB successfully offered nearly 300.8 million shares and in the first quarter, SHB issued more than 251 million shares to pay dividends with the rate of 20.9% in 2017 and 2018.
This increase in charter capital is in the development plan of SHB and was approved at the SHB’s Annual General Meeting of Shareholders in 2019. SHB’s unpaid dividends in 2019 have been approved at the General Meeting of Shareholders with the rate of 11% dividends being paid no later than quarter 3/2020 in accordance with the regulations of the State Bank.
Currently, the increase of charter capital is extremely important for SHB. It will help the bank strengthen its financial capacity, management competence, enhance competitiveness in the process of international economic integration, create favorable conditions for expanding its operation network, investing in facilities, technology, diversifying products and services to better meet the needs of domestic and foreign customers. At the same time, the capital increase is the basis for the bank to complete all the pillars of Basel II.
In addition to completing the first pillar of Basel II to fully meet the provisions of Circular 41 – SBV, with the increase of charter capital of more than VND 5,000 billion, SHB has basically completed pillar II and is heading to complete all three pillars of Basel II. At present, only very few banks have announced that they have completed all three pillars of Basel II. In 2020, on the basis of completing the final components of the ICAAP framework, SHB will officially complete all three pillars of Basel II, further affirming the specific efforts and actions of SHB to improve financial capacity, increase competitiveness in the market, and at the same time, ensure compliance with the provisions of the Regulatory Authority and meeting advanced international practices on risk management.
In order to meet the requirements of Basel II, SHB has been making great efforts under the strict assessment of the State Bank of the level of compliance with Circular 13. Especially, the State Bank highly appreciates the governance structure and the system of risk management policies and information technology that SHB has met.
By fully complying with the three pillars of Basel II, SHB will continue to develop and use advanced methods in calculating capital, ensuring satisfaction of international standards, improving bank transparency, heading towards the application of Basel III in the long-term on the bank’s risk management which is an important foundation for SHB’s business activities to be safer and more effective. This is also the basis to help SHB affirm and enhance its reputation with domestic and foreign investment community as well as credit rating agencies.
According to experts, the implementation of Basel II is a strategic step for the bank, helping the banking system to be healthy and stable. It requires the bank to invest resources on data quality, human resources but also brings about a lot of benefits. Banks implementing Basel II will increase their reputation, enjoy better global credit ratings, have more opportunities to get access to ample capital with cheaper cost. On the journey to build a healthier and more sustainable banking system, it is extremely important for banks to fully meet the provisions of Circular 41 and Circular 13 of the SBV. If the banks meet and implement the provisions of the two circulars, they will also complete the implementation of three pillars of Basel II.
In addition, the successful increase of capital is also crucial for the safe and sustainable development of SHB in the current context. SHB has recently planned to divest from SHBFC consumer finance company to a major foreign strategic partner. The divestment will also ensure to bring significant capital for SHB to improve its financial capacity. Accordingly, the increased capital buffer is a solid foundation for the bank to continue expanding its business scale on the basis of maintaining prudential ratios, especially the capital adequacy ratio as prescribed in the Circular 41, and to support customers who are affected by COVID-19 epidemic. In response to the COVID-19 epidemic, the bank has conducted stress tests and capital planning to ensure the maintenance of capital adequacy ratios in the context of the epidemic affecting the entire economy.
In the face of complicated development of the epidemic, in strictly implementing the directions of the Prime Minister, the State Bank, the Ministry of Health in the prevention and control of the epidemic, SHB has adjusted the time to organize the Annual General Meeting of Shareholders which is expected to be held in June.