VietNamNet
Bridge – A series of big Vietnamese
commercial banks have announced that they plan to issue long term international
bonds. The information has surprised people, who cannot understand why banks
still seek foreign currency capital, though they have dollars in excess and the
dollar lending has been tightened.
It’s better to seek capital from
international market
The
Vietnam Bank for Foreign Trade (Vietcombank) plans to issue 10-year one billion
dollars’ worth of international bonds at maximum this year.
Vietcombank’s
mobilized capital in foreign currencies accounts for 30 percent of the total
mobilized capital of the national economy, while its lending in foreign
currencies accounts for 32.4 percent of the total outstanding loans, and the
ratio of lending on mobilized capital is 83.8 percent.
Meanwhile,
it’s really difficult to mobilize foreign currency capital now due to the low
ceiling deposit interest rate set up by the State Bank. Meanwhile, the demand
for foreign currency loans remains firmly high.
Therefore,
Vietcombank believes that it needs to seek long term and stable sources of
foreign currency capital by issuing international bonds.
General
Director of the Asia Commercial Bank (ACB) Ly Xuan Hai said the bank is
negotiating with foreign partners on the plan to issue 100 million dollars
worth of long term international bonds.
Prior
to that, in 2011, Vietinbank revealed the plan to issue 500 million dollars
worth of international bonds. On March 19, the bank kicked off the series of
roadshows in Singapore, Hong Kong, London, Boston, New York, Los Angeles, San
Francisco to offer to sell bonds.
A
recent report by the State Bank shows that a downward trend in the total
deposit balance of individuals and institutions was seen in the first months of
2012. Meanwhile, some commercial banks still reported high ratios of the
lending on the mobilized capital.
As such,
it is understandable why banks rush to mobilize capital in foreign currencies.
However,
Dau tu tai chinh newspaper quoted Pham Trung Cang, Deputy President of
Eximbank, as saying that banks now have hundreds of millions of dollars in
excess, and that banks try to call for capital from the international market
not to lend, but use as the provisioning to satisfy the required CAR (capital
adequacy ratio
It’s not an easy task
Dr Le
Xuan Nghia, a well-known economist and former member of the National Finance
Supervision Council, has noted that the State Bank tends to impose a stricter
control over the capital adequacy norms. Therefore, the banks’ demand for
increasing capital has been increasing, thus leading to the demand for long
term capital from foreign sources.
However,
in order to successfully call for capital on the international market, banks
would have to follow a lot of procedures and satisfy a lot of requirements. The
issuers have to get the permission from the State Bank which would give the nod
only if the values of the bonds are within the foreign borrowing limit approved
by the Prime Minister.
However,
not all the banks can have the relations with the partners good enough to
successfully call for capital.
In
2011, some big conglomerates including: PetroVietnam, Vinacoal and the
Electricity of Vietnam had to delay the plan on issuing international bonds.
Spencer Lake, a senior executive of HSBC Group, believes that the decision was
made because of the unfavourable conditions of the market.
He said
on Thoi bao Kinh te Saigon that the international capital market was badly
affected by the public debt crisis. Meanwhile, the credit ratings of Vietnamese
enterprises were lowered because of the Vinashin case.
C. V
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