VietNamNet Bridge – Finance leasing companies have been
operating in a risky legal framework where they can easily lose capital because
of bad debts and incur losses.
The State Bank of Vietnam has announced
on its official website about the revoking of the operation license from
ANZ/V-TRAC finance leasing company.
According to the Finance Leasing
Association, the company stopped its operation a long time ago, while the
license revoking was just an administrative procedure.
Kexim, a 100 percent foreign
owned company, has also stopped its finance leasing business. The remaining two
wholly foreign owned companies have reportedly been facing big challenges.
Domestic companies have reported
big losses and high bad debt ratios. Agribank’s Finance Leasing Company I and
Agribank’s Finance Leasing Company II, Vinashin Finance Leasing Company Ltd.
According to the National Finance
Supervision Council, it is the finance leasing companies which have the highest
bad debt ratios among credit institutions. The ratios of some companies were up
to 50 percent in 2012.
Dau tu has quoted its sources as
saying that most of the companies are facing the liquidity risks, because
though having small chartered capital and modest mobilized capital, they still
bought valuable assets for leasing without requiring collaterals.
Nguyen Hoang Minh, Deputy
Director of the HCM City Branch of the State Bank of Vietnam, confirmed that a
company even has lost all of its stockholder equity when doing business.
The finance indexes of finance
leasing companies show their bad business performance. The main source of
capital of the companies is the loans from the parent banks, while the ratio of
outstanding loans on the mobilized capital of many banks was at over 100
percent.
The finance leasing outstanding
loans in HCM City increased sharply in 2008 by 33.9 percent, then by 11.9
percent in 2009, by 11.34 percent in 2010 and 9.54 percent. Especially, the
outstanding loans decreased in 2012.
In general, finance leasing
companies only have a small market, where the main clients are the enterprises
which need specific and unpopular machines and equipments, such as the ones
used in construction, textile and garment or ships.
Ten years ago, when the first
finance leasing companies were established, analysts believed that a bright
future was awaiting the companies, because this was thought to be a reasonable
way for small and medium enterprises to get official loans.
However, the predictions have yet
come true. Unable to compete with commercial banks in mobilizing capital,
operating in a risky legal framework, meeting the obstacles in collecting
debts, finance leasing companies have become “short of breath.”
Only some finance leasing
companies have reported profit. VietinBank Finance Leasing Company, for
example, made a profit of VND100 billion in 2012, and Vietcombank’s VND60
billion.
A senior executive of
Vietcombank’s finance leasing company said the current legal framework
stipulates loosened provisions on asset leasing, which is one of the reasons
that put high risks for the companies.
It’s very difficult for finance
leasing companies to supervise the business performance of clients to be sure
that the leased assets can be used for the right purposes. A lot of clients
refused to pay assets back to finance leasing companies or give assets backs in
bad conditions.
In this case, according to Dam
Duc Long, Secretary General of the Finance Leasing Association, in principle,
finance leasing companies can take legal proceedings to claim their assets
back. However, it would be a very time consuming and costly procedure.
Compiled by C. V
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