Between
five and eight commercial banks are expected to merge in the first months of
2012. The challenge lies in where money comes for banking restructuring.
Recently, the National Financial Supervisory
Committee revealed the rocketing ratio of lending to mobilisation among the
banking system. The percentage stood at 0.95 in 2008 and climbed to 1.01 in
2010 and 1.02-1.03 in 2011.
In the meantime, each dong mobilised must be
deducted for compulsory reserves, liquidity provision and other provisions,
which could account for 10pct of the mobilised amount. Yet, the statistics
indicate a different trend.
According to the banking news in December
2011of the central bank the market's credit growth as of 21 December 2011 stood
at 10.9%, equivalent to 2.524 million billion dong against the previous year
end. The total mobilised capital jumped 9.89% and payment instruments hiked
9.27%, or 2.514 million billion dong and 2.87 million billion respectively.
As such, capital mobilisation growth is lower
than credit growth both in percentage and absolute figure, which was
compensated by total payment instrument increases.
What is noteworthy is that short-term capital
is mobilised while mostly mid- and long term capital is loaned. Liquidity risks
could be found in any quarterly and monthly reports of listed commercial banks
as most deposits' terms are between one and three months while tSTC of loans
are around three and six months.
The regulation that 30% of short-term
mobilised capital at most can be used to grant mid and long term loans has long
been ignored. The central bank's governor once admitted the percentage mounting
to 60%-70%, even 100pct at several banks. Therefore, banks' demand for capital
is tremendous so as to ensure their own liquidity, let alone the economy's
demand.
Normally, a production cycle lasts from three
to six months, even the whole year, which means short-term loans impossible.
Yet, with current flat interest rates, onemonth deposits are popular. Credit
institutions, therefore, have to facilitate needs of both borrowers and
depositors so as to survive.
Recently, the total payment instruments
tumbled from 26.7% to 9.27%, which has triggered debt collection rather than
loaning. Lending that has been the principal contributor to banks' revenue has
now been replaced by debt recovery and increased mobilisation.
On the verge of collapse, it is high time
banks of weak liquidity be merged. SCB-Tin Nghia-De Nhat would not be the last
case. A merger consulting contract worth of half million US dollars has
recently been signed between a securities company and a bank. Also, three more
banks are about to become partners.
This year is expected to ease liquidity
problems and pave the way for interest rate cuts afterwards, which in turn
largely depends on liquidity.
At the same time, another crucial task would
be stabilisation of dong value and inflation mitigation.
According to Vuong Dinh Hue, minister of
Finance, public investment in 2012 could remain unchanged at around 180
trillion dong funded by the state budget and 45 trillion dong government bonds.
Meanwhile, payment instruments are anticipated
to grow 14%-16%. Considering the figure of 2.87 million dong in December 2011,
payment instruments are expected to gain 400 trillion dong-460 trillion dong
this year.
Yet, it is too early to be too optimistic as
challenges facing the banking sector would come further. Late August 2011,
banking industry was refinanced tens of thousands of billion dong, which would
be due this February.
Previously, refinancing would be immediately
applied once any bank ran into liquidity difficulties. However, money is now
only pumped into where is scarce and in the event of emergency. Hence, it is
vital that commercial banks restructured debts and operations before seeking
the central bank's bailout.
VietBiz24
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