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The partly-privatized Vietcombank on Tuesday received government approval to raise their charter capital by 33 percent to VND17.59 trillion (US$902 million).
The move aims to help increase the bank's capital adequacy ratio (CAR).
"The charter capital increase is very positive," said Vietcombank management board member Le Thi Hoa in a phone interview with Vietnam News.
Vietcombank, coded VCB on Ho Chi Minh Stock Exchange, is in the process of finalizing its financial prospectus to submit to the State Securities Commission next week with the hope of receiving approval by the end of this month.
Under the proposal, Vietcombank will issue additional shares to all existing shareholders in accordance with the ratio of 100:33 at the face value of VND10,000 per share.
"We hope that right after the increase, our CAR will increase to 9-10 percent from 8.45 percent and we will have more capital to do business," Hoa said.
Under the Circular No13 issued by the State Bank of Vietnam, commercial banks must have a CAR of at least 9 percent by the end of this month, which is said to challenge several banks.
In the past two months, Vietcombank cut stakes at Vietnam Eximbank and Gia Dinh Bank to 6.93 percent and 11 per cent to restructure their investment portfolios in an effort to raise their CAR by the end of the month.
Early last month, Vietcombank increased its charter capital to VND13.22 trillion ($678.15 million).
Fitch Ratings recently lowered Vietcombank's individual rating from D to D/E, removed the rating from Rating Watch Negative, and affirmed Vietcombank's Support Rating at 4.
Fitch said the downgrade reflected Vietcom-bank's substantially weakened balance sheet that arose from excessively strong loan growth and the fragile quality of loans.
Vietcombank's credit profile was said to be comparable to D/E-rated State-owned banks, even though the bank's loan to deposit ratio was among the lowest.
"That's just their business and their ratings are not always true," said a representative from the bank who asked to be unnamed.
A foreign credit rating service provider like Fitch does not have a full understanding of Vietnamese banks and their standards may fit more with foreign banks, the official said.
"Look at the market response to that news. Nothing happens and VCB shares are in good liquidity, it is just up and down as usual," said the official.
On Tuesday, VCB share closed down 1.6 percent with individual shares priced at VND37,400 VND each ($1.91).
The Hanoi-based bank, which remains more than 90.7 percent State-owned, posted a first-half profit of VND2.8 trillion ($145.8 million), up 7.3 percent against the same six months last year. Net income from non-credit services was up 15 percent to a total of VND475 billion ($24.7 million).
Vietcombank has increased its risk provision to 39.6 percent against the first half of last year to VND350 billion ($18.2 million) and as of June 30 has total assets worth VND246.3 trillion ($12.8 billion).
