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Posts Tagged ‘lenders’

Foreign lenders rush to raise registered capital

In Uncategorized on January 8, 2011 at 4:26 am

While local lenders gained a one-year extension for the deadline to raise their registered capital, foreign-owned banks are on a rush to increase the capital in accordance with the Law on Credit Institutions.

A foreigner waits outside an ATM booth in Ho Chi Minh City (Photo:Minh Tri)

Prime Minister Nguyen Tan Dung has approved the proposal requiring local lenders to raise registered capital levels to VND3 trillion (US$153.9 million), by Dec. 31, 2011, the State Bank of Vietnam said on its website last week.


Commercial lenders took a breath of relief on the fact that the central bank extending the deadline to raise registered capital by one year to ease pressure on banks having difficulty meeting higher requirements.


Foreign-owned banks, meanwhile, are in a race to either reduce the outstanding credit or add more capital in an attempt to meet the new requirement, experts said.


According to the Law on Credit Institution, foreign banks are not allowed to offer a loan which is worth 15 percent higher than its registered capital.


A Vietnam branch of a foreign bank said in spite of its registered capital of $15 million only, it could support projects worth $50 million thanks to the mother bank’s large capital.


But according to the requirement of raising registered capital levels, they can loan around $1-2 million only.


The State Bank of Vietnam early this week granted permissions to three foreign lenders to raise their capital.


Among those banks are Taiwan-based Hua Nan Commercial Bank increasing its registered capital to $65 million from $15 million, Taiwan-based Chinatrust Commerical Bank raising to $50 million from $15 million and Japan’s Mizuho Corporate Bank to $133.5 million from $15 million.


An official of Korea Exchange Bank said the bank will surely have to raise capital as 60 percent of its clients borrowed more than $4 million for each. 


Financial experts said foreign lenders with high foreign currency liquidity have an edge over local banks. Therefore, asking them to raise capital will prompt to a shortage of foreign currency, the expert warned.


“Borrowers struggling to get foreign currency loans from foreign banks will switch to local lenders, pilling up pressures on the country’s foreign currency supply,” an economist said.


“The National Financial Supervisory Commission proposed the government to set up credit limits for foreign banks, instead of their branches in Vietnam,” said Dr. Le Xuan Nghia, vice chairman of the commission.


Statistics show Vietnam has 71 foreign credit institutions with 48 representative offices. Their total asset this year reaches more than VND420 trillion, increasing 30.8 percent year-on-year and making out of 11.25 percent of the banking system’s total asset.


They mobilized nearly VND364 trillion, a year-on-year increase of 33.8 percent, and loaned more than VND230 trillion in the first ten months of the year. 

Source: SGGP

Big lenders survive interest rate fluctuation

In Uncategorized on December 16, 2010 at 10:02 am

During the interest rates fluctuation period, most of small lenders tended to restrain offering loans to maintain liquidity levels, while big ones made a contrast move.

View at ShinhanVina bank (Photo:Minh Tri)

Do Minh Toan, deputy general director of Asia Commercial Bank, known as ACB, said his lender was well-prepared for the increasing capital demand at yearend, offering loans to many regular clients with reasonable rates even when interest rates started to fluctuate.


“High interest rates often bring down businesses’ earnings. However, this year’s healthy growth of local enterprises helped boost lenders’ credit growth,” said Toan.


ACB offer an interest rate of 15.5 percent per year on short-term deposits and 16-16.5 percent on long-term ones.


“Bank interest rate will remain choppy until the New Year Tet holyday on February. With the holiday coming sooner than previous years, the amount of money flowing on the market after Tet will be abundant. Therefore, I expect the deposit rate on February will be set at a lower rate of 12-14 percent a year,” Toan said.


Techcombank, which is the fifth-largest bank in term of assets, triggered an interest rate race last week when announcing it would offer dong depositor rates as high as 17 percent per year.


Other lenders reacted by pushing their own rates up, some as high as 18 percent.
But these offers were rescinded after the central bank requested them to bring the rates down to prevalent market levels – 14 percent or less.


The Hanoi-based lender then was among the first lenders reducing the deposit rate, offering the rate of 13.45-13.95 percent per annum.


Interbank lending rate also climbing
Expecting the fluctuation in interest rates to cool off in the upcoming time has seen many banks replacing monthly interbank loans with weekly ones.


Big lenders are giving interbank loans with three-month payday only, instead of two weeks or one month as they used to be, a general director of a big commercial bank in HCMC, who wants to be unnamed, said, adding the interbank lending rate last week remain at high levels of 19-20 percent per annum.


“The lending rates for shorter-payday loans are much higher. Despite knowing the fact that the rate dropping after Tet, many small banks still had to borrow at the high rate as their liquidity is low,” he said.


Analysts predicted the increasing interbank rate will end soon as the central bank extended the deadline for lenders to raise registered capital by one year to ease pressure on banks having difficulty meeting higher requirements.


Prime Minister Nguyen Tan Dung has approved the proposal requiring local lenders to raise registered capital levels to VND3 trillion ($153.9 million), by Dec. 31, 2011, the State Bank of Vietnam said on its website Tuesday.

Source: SGGP