Viet banks have to attract US$1.56billion

However, the plans would require the banks to attract VND30 trillion ($1.56 billion) in new investment over the next four months, which seems no easy task for unlisted banks due to the current restrictive monetary policy.

The central bank has already approved the plans of Mekong Bank, Dai A Bank, Ficombank, Viet A Bank, SaigonBank, Tien Phong Bank, Southern Bank and VP Bank, with the remainder expected to get the nod this month to increase charter capital from an average of VND1.55 trillion ($80.7 million) to an average of VND3.5 trillion ($182.3 million)

"It is very important to closely monitor the process of approved banks in increasing their charter capital," said State Bank of Viet Nam Governor Nguyen Van Giau. "I will supervise how they sell shares to the public or seek strategic investors."

Giau has also ordered banks to make monthly progress reports.

The higher charter capital regulations were issued four years ago, but in May this year, 23 out of 42 credit institutions still had charter capital below VND3 trillion ($156.25 million). The central bank has vowed to close these banks down or force them into mergers with larger institutions if they fail to meet the capital requirements by year's end.

To meet the deadline, Dai A Bank is relying on the backing of its controlling shareholder, Tin Nghia Group. Navibank, Western Bank and Gia Dinh Bank also are looking to the support of major stakeholders like the Viet Nam Textile and Garment Group (Vinatex), Sai Gon Investment Group and Vietcombank.

The small banks are also competing for available capital with major banks with listings on the stock exchange.

"Big banks like Vietcombank, Vietinbank, Asia Commercial Bank, Sacombank and Eximbank all plan to increase charter capital, and obviously they will more easily attract money than small banks," said a representative of a well-known HCM City-based bank who asked that his name be withheld.

However, he noted, "The stock market is gloomy. That's their challenge."

The SBV 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 met the requirement by the deadline. Another 10 banks only managed to meet it by the end of 2009, with the central bank granting permission for the delayed compliance.

This time, however, the SBV is saying the deadline is hard-and-fast.