VietNamNet Bridge – While a lot of institutional investors have
got stuck with their investments in the banking sector, state owned
conglomerates, which are undergoing the restructuring process, still want to
“kick against the pricks.”
After getting downgraded from an
economic group to a general corporation put under the control of the Ministry
of Construction, HUD, an urban area and housing development, has expressed its
ambition to make investment in the finance, banking and insurance sectors.
In its operation charter, HUD
stated that with the investment capital of 3981 billion dong, it would still
focus on developing houses, urban areas, industrial zones and trade properties.
Especially, the state owned general corporation plans to jump into the fields
of finance and banking.
The ambition by HUD remains on
paper, while it has yet come true. However, the plan drawn up by HUD shows that
the finance and banking sector, in the eyes of investors, remains very
attractive and it can bring fat profits.
Though a lot of banks have been
unprofitable or put under the special control by the State Bank, the banking
sector has not become less attractive to investors as people thought.
The noteworthy thing is that
state owned giants still wish to make investment in the finance and banking
sector, though the State Bank of Vietnam has requested its big conglomerates to
gather their strength on their core business fields and withdraw from other
investment projects.
Some try to get out, others attempt to jump in
A lot of big guys have been
quietly withdrawing from the banking sector. The family of the companies
relating to the Asia Commercial Bank (ACB) have withdrawn 4.5 trillion dong
worth of capital from Kien Long Bank and Eximbank. The investors relating to the
big guy Dang Thanh Tam have quitted Western Bank and Navibank. Meanwhile, Dang
Van Thanh’s family members have left Sacombank.
The big businessmen decided to
leave for many reasons. However, the most important one is the big problems of
the banking system.
A lot of commercial banks have
reported the sharp fall of 50 percent in profit. The bad debt ratio has been
increasing, the lending interest rates have decreased, while the credit demand
is weak,
Not only small banks, but the big
guys like Vietcombank, Sacombank, ACB or Eximbank all have reported the profit
decreases. A report by the HCM City Branch of the State Bank of Vietnam showed
that the local banks’ profit in the first 10 months of the year was just equal
to 28.5 percent of that of 2011.
Some commercial banks once
reported huge profits for the last some quarters. However, Governor of the
State Bank of Vietnam Nguyen Van Binh then affirmed that the banking sector’s
profit was not higher than other business fields.
A recent report by the World Bank
and IMF showed that Vietnamese banks still cannot meet all the requirements
shown in Basel I. The State Bank of Vietnam has just set a modest goal that by
2015, Vietnamese banks would meet all the requirements of Basel I and strive to
partially satisfy the requirements of Basel II
Despite the warnings, state owned
general corporations and economic groups still invested 23,744 billion dong in
securities, investment funds, insurance, banking and real estate in 2011, up by
3056 billion dong over 2010.
Manh Ha
Business & Investment Opportunities
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