New regulations place restrictions on bank listings

New regulations place restrictions on bank listings

Banks wanting to list shares on the nation's stock exchange will be required to satisfy tighter requirements on bank management, under Circular No 26/2012/TT-NHNN just issued by the State Bank of Viet Nam

According to market insiders, this circular is likely constrain banks from listing shares because many banks currently have not established internal audit standards or internal control divisions.

Requirements pertaining to bad debt ratios are another significant barrier. Many banks currently cannot satisfy the requirement of maintaining a bad debt ratio of less than 3 per cent of total outstanding loans for two consecutive quarters. Under the new regulation, they will have to do so for two consecutive years.

"Under the current economic climate, many major banks have not maintained a bad debt ratio of under 3 per cent for two quarters in a row," ACB Securities Co banking industry analyst Cao Tan Phat told the newspaper Dau tu Chung khoan (Securities Investment).

Eight banks and one financial company currently list shares on one of the nation's two stock exchanges, and three of those – Vietcombank (VCB), PetroVietnam Finance (PVF) and Nam Viet Bank (NVB) – have bad debts in excess of 3 per cent of outstanding loans.

The Bank for Development and Investment of Viet Nam (BIDV), which applied in May to list shares on the HCM City Stock Exchange, also has a bad debt ratio of 3.29 per cent in the second quarter of this year.

Southeast Asia Bank, Southern Bank, Eastern Bank, DaiA Bank, Techcombank and HDBank all planned to debut shares last year or this year but have postponed the moves indefinitely

Bad debts of listed banks 2012

Bank Charter capital Bad debt ratio

                                                                            Q1               Q2

                                                                                                               (million USD)

Vietcombank (VCB)                        1,103.5       2.87%          3.50%

Vietinbank (CTG)                            963.3           1.85%         2.50%

Eximbank (EIB)                              588.3            1.98%       1.73%

Sacombank (STB)                           511.4           0.80%        1.29%

Asia Commercial Bank (ACB)       446.5            1.20%        1.53%

Sai Gon-Ha Noi Bank (SHB)          442.1            2.44%        2.79%

Military Bank (MBB)                      347.6            1.88%        1.84%

PetroVietnam Finance (PVF)          285.7             2.20%        3.22%

Nam Viet Bank (NVB)                     143.3           3.50%       3.87%

Source: Securities Investment

vietnamnews