Banks wanting to list shares on the nation's stock exchange will be
required to satisfy tighter requirements on bank management, under Circular No
26/2012/TT-NHNN just issued by the State Bank of Vietnam.
The new circular, effective
October 29, stipulates that credit institutions seeking to list shares will
have to ensure compliance with all financial safety regulations set for credit
institutions for six consecutive months prior to their listing application.
They will also be required to
implement loan classification and make provision against credit risks as
regulated by the central bank, as well as organise internal audit and internal
control divisions.
According to market insiders,
this circular is likely constrain banks from listing shares because many banks
currently have not established internal audit standards or internal control
divisions.
Requirements pertaining to bad
debt ratios are another significant barrier. Many banks currently cannot
satisfy the requirement of maintaining a bad debt ratio of less than 3 percent
of total outstanding loans for two consecutive quarters. Under the new
regulation, they will have to do so for two consecutive years.
"Under the current economic
climate, many major banks have not maintained a bad debt ratio of under 3
percent for two quarters in a row," ACB Securities Co banking industry
analyst Cao Tan Phat told the newspaper Dau tu Chung khoan (Securities
Investment).
Eight banks and one financial
company currently list shares on one of the nation's two stock exchanges, and
three of those – Vietcombank (VCB), PetroVietnam Finance (PVF) and Nam Viet
Bank (NVB) – have bad debts in excess of 3 percent of outstanding loans.
The Bank for Development and
Investment of Vietnam (BIDV), which applied in May to list shares on the Ho
Chi Minh Stock Exchange, also has a bad debt ratio of 3.29 percent in the
second quarter of this year.
Southeast Asia Bank, Southern
Bank, Eastern Bank, DaiA Bank, Techcombank and HDBank all planned to debut
shares last year or this year but have postponed the moves indefinitely.
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