Wider gold option to be available

Sunday, May 18, 2008
Asia Commercial Joint Stock Bank (ACB) is in its last phase of installing a gold sheet manufacturing line, ACB’s General Director Ly Xuan Hai has said.

The line is going under experimental operation and scheduled to introduce first ACB gold sheets of 1.2 and 10 taels to the market in June.

According to Sacombank’s CEO Dang Van Thanh, the bank is about to introduce gold sheets under “Than Tai” trademark to the market in July. The bank has also planned to bring a gold services company into operation.

The World’s Gold Council said Vietnam is one of the biggest gold consumers. The volume of gold traded in Vietnam each day increased from 500kg in 2002 and then 2 tonnes by 2007.

At its hieght, up to 19 tonnes of gold are traded daily.

Rules eased for IPOs

Sunday, May 18, 2008
Decree No109/2007/ND-CP of June 26, 2007, regulating the participation of investors in the equitisation of State-owned enterprises, allows non-strategic foreign investors to take part in bidding on initial public offerings (IPOs) alongside domestic investors.

However, overall foreign ownership in a commercial bank has been capped at 30 per cent. A single institutional investor is allowed to hold no more than 15 per cent of total stake.

In the Vietcombank IPO last December, for instances, foreign investors were allowed to buy shares without State Bank permission.

Similarly, VAFI’s proposal would allow foreign investors to pick up bank shares already trading on the OTC market without any further regulatory approval, as long as the total stake were not to exceed 5%.

"This would help free up frozen bank shares on the OTC market and help dispel the heavy spirit of investors on the stock market," said Hai.

VAFI said, "We hope that state regulators will work together more closely to draft a suitable policy to help the stock market rebound." A source from the State Bank told VNS by phone yesterday that "I think the control is really necessary because the banking sector is the life blood of the economy."

Investor association calls for change to bank stock selling rules

Sunday, May 18, 2008
The Viet Nam Association of Financial Investors (VAFI) has sought the government’s approval for private banks to sell 5% stakes to foreign investors without asking for central bank approval.

The move was made in a bid to halt a slump in bank stocks, the association said.

“Share prices of banking stocks plunged dramatically,” VAFI General Secretary Nguyen Hoang Hai told.

“Many stocks nosedived close to their face value [VND10,000], some even fell below that. Many bank shares lost 70 to 80% compared with the price offered to foreign strategic partners.”

“The share price of Vietcombank, Vietnam’s third-biggest commercial bank by assets, on the over-the-counter (OTC) market is around VND32,000, half the preferential price offered to bank staff.

“Employees of state-run banks, which were equitized over the last two years, will suffer more heavy losses if the share prices fall further.”

Hai also said Prime Minister Nguyen Tan Dung had earlier ordered state-run banks to halt selling collateralized shares and encouraged private banks to follow to help stop the stock market slump.

At the outset, all state-owned banks complied with the order but some state-run banks then sold collateralized shares in listed companies through investors’ accounts and asked dealers to sell unlisted stocks shares for them as they needed to settle debts of those shares.

“So VAFI is determined to seek the prime minister’s approval for allowing commercial joint stock banks to sell 5% or less [out of the 30 percent stake that foreigners can hold] to foreign investors without asking for the central bank’s permission,” Hai said.

He also said VAFI’s petition was an ad hoc measure – to apply for the next one or two years – aimed at raising the market’s liquidity.

“If our petition is approved, private banks will be able to buy back their shares to sell to foreign investors to halt a share price slump.”

“Buying back shares will enable the private banks to support their existing shareholders, as well as raise money more easily,” the association’s general secretary said.

VAFI estimated the total value of collateralized shares on the OTC market was more than VND10 trillion (US$623 million), so buoyancy would be restored on the informal market when banks settled debts of those shares, helping to lift the main markets.

Lending squeeze

Sunday, May 18, 2008
Want a bank loan? Be prepared for costly extra fees on top of towering interest rates.

Amid the credit crunch, would-be borrowers not only have to worry about being rejected or high interest rates, they also have to worry about surprise fees like “capital arrangement” and “credit management” charges.

Phuong, from Ho Chi Minh City’s Tan Binh District, said that if she borrowed from Techcombank she would be charged 1.65% a month in interest plus a capital arrangement fee of 0.5% on the total loan amount.

If she borrowed from the Southeast Asia Joint Stock Bank, she said she would have to pay a slightly lower interest rate of 1.5% per month plus a capital arrangement fee of 1.5-4.5% and a credit management fee of 0.9-4.8% depending on loan terms.

The longer the terms, the higher the fees, Phuong said.

An employee at another commercial bank who wished to remain unnamed said if the additional fees were taken into account, the “actual” monthly interest rates on loans from these two banks might reach 1.8% to 1.9%.

Tide turns

President of Oriental Commercial Joint Stock Bank (OCB) Vo Van Chau said one year ago, commercial banks had tried to “snatch” customers from each other by offering low interest rates on loans.

But commercial banks now are calling in repayments and screening loan applicants more closely.

The president of another commercial bank who spoke on condition of anonymity said it was a general increase in demand for loans – rather than a bank cash shortage – that was pushing up loan interest rates.

“At the moment, loan interest rates are no longer tied up with deposit interest rates,” he said.

“Rather, they depend on lending supply and demand.”

Flooded with an overwhelming demand for loans, the banker said many commercial banks have stopped lending for real estate investment and consumption purposes to devote loans to businesses that need funds for production.

Meanwhile, businesses across all sectors are suffering from serious capital shortages due to rising production costs.

According to the Viet Nam Association of Financial Investors (VAFI), raw material prices have jumped 20-40% so far this year, forcing businesses to increase their cash reserves.

Bank loans are now so difficult to get that many businesses have resorted to borrowing from their own employees and other sources at bank rates.

VAFI said the central bank’s capping of commercial banks’ credit growth at 30% this year has made it hard for banks to lend to new customers as well as old ones.