Bank capital is likely to be either lost or reduced due to worthless
shares or related dispute. How much such assets worth among banks’ collateral
would need clarification.
What has struck the public
recently is 20 million shares of Hoa Phat Steel JSC (HPS)-a subsidiary of Hoa
Phat Group HPG which were owned by recently arrested banking Mogul Nguyen Duc
Kien are mortgaged at ACB and simultaneously sold to HPG at 264 million dong.
HPG is awaiting investigation
results from the responsible agencies while ACB insisted on holding such
shares. Any conclusion has not been available, yet the question is how these
mortgaged shares could be sold that easily.
In principle, mortgage of shares
would require banks and share owners to present the shareholders books to the
companies for shares to be frozen. This must be confirmed in writing by general
directors and accountants of the firms, thus making these shares non
transferable.
As such, if these steps are
guaranteed, the shares mortgage at ACB could then hardly be transferred to HPG.
Also, if ACB had the shares frozen, HPG would have spent 264 billion dong for
20 million shares of HPS which already confirmed blocking such shares.
Therefore, there are two
possibilities-either the shares could not be frozen as yet, which means the
shares would still be with HPG and those mortgaged at ACB would turn out
worthless paper or the mortgage of shares follows the aforementioned procedure
making HPG suffer capital losses.
Earlier, general director of
Bianfishco Dieu Hien also used 25 million shares of Bianfishco worth of 250
billion dong as collateral at two banks and had them sold to Ho May Company at
the same time. Ho May Company apparently failed to finalise the ownership
transfer procedure before spending hundreds of billions dong on such shares.
The matter in question is why
these companies were willing to take that much risk. Also, would it be pressure
from large shareholders that force banks to ignore risk management standards in
loaning?
Therefore, potential risks
arising out of banks secured by shares could be noteworthy. What is dangerous
is individuals who are big shareholders of their own shares could confirm
freezing the shares on their own in order to be financed by credit institutions
and simultaneously sell the same amount of shares to other parties.
Many commercial banks currently
hold a large number of shares, most of which may turn out worthless.
Firstly, shares that have already
been transferred to another beneficiary are accepted by banks to be collateral.
Secondly, mortgaged shares belong
to companies of small amount of capital making their value negligible, which
implies the high possibility of banks’ capital loss.
Thirdly, loans could be secured
by worthless warranty deed which would be signed by unauthorised parties.
Thus, what comes into question is
whether soaring interest rates would to make up for such capital loss and how
and who to monitor commercial banks’ capital flows. Much would need
clarification and correction so as to enhance banking operations.
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