Week ending Dec 31: finance and banking review

The State Bank of Vietnam (SBV) unprecedentedly classified local banks into 4 groups to assign different credit growth targets in 2012.

The government’s moves

Ministry of Finance (MOF) said it would basically restructure the stock market in five phases during 2012-2015. Particularly, the country was working on a plan to merge its two stock exchanges in Hanoi and Ho Chi Minh City (HNX and HOSE) into a single stock exchange.

Vietnam Prime Minister, Nguyen Tan Dung, assigned four key tasks to the State Bank of Vietnam (SBV) in 2012, the central bank said on its website on Dec 29.

The State Bank of Vietnam (SBV) would not subsidize restructuring costs of any credit institutions, said Nguyen Van Binh, Governor of the central bank.

Finance and banking highlights

The Ministry of Construction (MOC), in collaboration with the central bank, proposed several suggestions to control the capital efficiency in the real estate market. MOC estimated that as much as 4% of property loans were bad debts as of Sept 30.

As at the end of 2011, Vietnam’s public debt was estimated to account for 54.6% of the country’s gross domestic product (GDP), government debt at 43.5% of GDP and national debt at 41.5% of GDP. Vietnam is estimated to run VND121.5 trillion budget deficit in 2011, representing 4.9% of GDP and lower than target of 5.3% GDP set by the Government.

The SBV pumped VND39.183 trillion into commercial banks through OMO from Dec 26 to Dec 29, the largest 4-day injection since early June, 2011.

The State Treasury on December 28 sold VND900 billion worth of government bonds, or 60% of the offered valueat the yield of 12.1% p.a. in an auction of 3-year and 10-year bonds.

The “old” Saigon Commercial Bank (SCB) raised interest rates on gold deposits at the bank to as high as 4.35% per annum, hitting a new fresh record high.

Bank for Investment and Development of Vietnam (BIDV) raised VND1.575 trillion by selling 3% of its charter capital, equivalent to 84.75 million shares in an initial public offering.

A Hanoi-based commercial bank was reported to offer customers an interest rate of 18.5% per annum for any deposits of over VND100 million, much higher than 14% rate cap set by the central bank. Meanwhile, local commercial banks still offered loans at interest rates of as high as 22-23% per annum.

Source Sophie/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial