New State Bank regulations get tough on “tycoons” exceeding their share limit
New State Bank regulations get tough on “tycoons” exceeding their share limit
As the State Bank of Vietnam (SBV) has threatened to impose stiff fines or punishment on bank shareholders who have share proportions higher than the permitted levels, many bankers are believed to be selling parts of their shares to reduce ownership ratios.
A circular being drafted by SBV says that bank shareholders who have been holding higher-than-allowed proportions of stakes since before January 1, 2011 must reduce the ownership ratio by March 31, 2015.
Those who have been holding higher-than-allowed proportions of stakes since after January 1, 2011, must do this within 30 days, since the day the circular takes effect.
Under the Law on Credit Institutions valid as of January 1, 2011, individual shareholders must not hold more than 5 percent of one bank’s shares, while individuals and relatives must not hold more than 20 percent.
However, the regulation has been ignored. The central bank has found that five out of 33 joint stock banks have individuals holding more than five percent of the banks’ chartered capital, and five out of 33 banks have institutions holding more than 15 percent of banks’ chartered capital.
It has also discovered that eight out of 33 banks having groups of shareholders and their relatives holding more than 20 percent.
The regulations have been set to be sure that banks can operate in a healthy way and that they cannot be swayed by any individual or institution.
Many bank tycoons who hold more shares than allowed have said they were innocent, saying that they have been holding the shares before January 1, 2011, the time when the regulations took effect.
However, once the draft circular turns into reality, they will be punished if they continue ignoring the regulations. The tycoons have a grace period of nine months to sell shares to reduce their ownership ratios.
Though the State Bank appears to be heavy handed, no one can say for sure if the policy maker can improve the situation.
Some analysts have warned that bank tycoons will try every possible means to retain the high proportions of stakes they are holding in order to maintain their control over the banks.
The analysts have every reason to doubt that the new regulation, once brought into life, will be respected by the violating bankers.
The Law on Credit Institutions took effect four years ago, but the problem still exists.
At Nam A Bank, for example, a lot of changes have been made, but one thing is unchanged – the firm position of Tu Huong and her family members.
Tu Huong is well known in Vietnam not only as a bigwig, but also as the mother-in-law of Duong Truong Thien Ly, a famous beauty.
Some insiders even think Tu Huong’s position at Nam A Bank would be heightened when the bank fulfills the plan on raising the chartered capital from VND3 trillion to VND4 trillion by issuing more shares to existing shareholders.
Tu Huong’s son – Nguyen Quoc Toan – and relatives now reportedly hold nearly 30 percent of Nam A Bank’s shares.
vietnamnet
