HA NOI (VNS) — Shareholders will be unable to negotiate dividends with their banks this year, with the final decision resting with the State Bank of Viet Nam (SBV), according to senior bank officials.
A Monday report by cafef.vn cited the officials saying the new action taken by the SBV aimed to ensure that commercial banks strengthened their provisions to deal with financial risks and bad debts before thinking about paying dividends. This was needed to keep the rate of bad debts below three per cent by the end of this year.
It is a part of Directive 02/CT-NHNN issued by the SBV on January 27, which aimed to support the banks to reduce their bad debts.
The normal process has been for the Board of Supervisors to discuss the dividends with shareholders, and the payments would be made "automatically" once two sides reached an agreement," the officials said.
Now, a commercial bank has to propose a specific dividend to the central bank, and the latter would take a decision based on the bank's business results including lending, non-performing loans or bad debts and risk management.
The highest dividend can only be nine per cent per year, and some banks have even been told not to pay any dividend.
The Viet Nam International Bank (VIB) planned a 11 per cent payout, however, the central bank only approved a nine-per-cent dividend, said Dang Khac Vy, President of the bank's Board of Directors.
He said that the dividend used to be agreed between the shareholders and the Board of Supervisors, which was formed to help shareholders oversee the company's operations.
But the SBV has decided to take control of dividends because all commercial banks were being restructured and have been asked to provide transparent financial reports for 2015 and 2016, he said.
The Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) decided at a shareholders' meeting last Saturday to pay a six-per-cent dividend, said Nguyen Duc Huong, Vice President of the Board of Directors.
He said the bank had initially planned a ten-per-cent dividend, but lowered it twice to reach six per cent, which should be considered quite high given that the economy was only recovering slowly now, and a lot of companies have gone bankrupt.
Market observers said that even when shareholders were able to negotiate their dividend with the banks, they did not always get their way.
At a Military Bank meeting in 2013, shareholders protested when asked to approve a twelve percent dividend for 2012. But the protest proved to be in vain as the major shareholders did not co-operate with the minor shareholders.
Last March, shareholders demanded a dividend higher than seven per cent from the Nam A Bank, but accepted the initial proposal after being told of the difficulties the bank was facing.
Shareholders of the Bank for Investment and Development of Viet Nam (BIDV) received a dividend of 8.5 per cent for 2013 last April, 2.1 per cent in cash and 6.4 per cent in shares.
BIDV shareholders are luckier than their peers in other banks as the bank has agreed to raise its dividend for 2014 to 9 per cent. — VNS