Securities companies dying slow death
Securities companies dying slow death
When the VN Index tumbled a number of years ago, it spelled trouble for many companies who had to delist. Some left the bourse, and the remaining who were considered the most resilient are now struggling to keep their heads above water.
A third quarter report on securities brokerage firms by the HCM City Stock Exchange shows that the top 20 securities companies hold 80 percent of the market share, while 70 companies comprise the other 20 percent.
Brokerage is just one of many different business operations of securities companies, but the market share index can show their strengths.
Nguyen Chi Trung, deputy general director of Rong Viet Securities Company, said small securities companies would not be able to exist without support from commercial banks.
“They will not be able to expand any of your businesses,” he explained. “They will need capital to provide more financial services, attract more investors and improve your prestige, which allows you to obtain consultancy contracts.”
“They will be able to linger, but cannot grow. Meanwhile, the securities companies with good financial capability can easily expand their business scale in the market,” he added.
A series of securities companies have been reportedly put under special control of the watchdog agency because they cannot satisfy the requirements on financial security.
Some of the companies are in such a bad situation they do not have enough money to pay the transmission line connector fee. As a result, their connection with the stock exchange has been cut.
These include many well-known names like Mekong Housing Bank Securities (MHBS), CIMB-Vinashin Securities, Viet Tin Securities (VTSS) and Kenanga Vietnam (KVS).
Dr. Le Dat Chi from the HCM City Economics University noted that securities companies would rather “die” now instead of exist in difficult conditions. He said merging with other companies and dissolving are the two options now.
Golden Lotus Securities (GLS), for example, instead of selling assets among its shareholders as initially planned and formally dissolving its business, has unexpectedly announced that it will merge with APEC Securities with the conversion ratio of 1:1, a price described by financial analysts as “reasonable”.
“The procedures for dissolving a business are more complicated than for merging a business,” Nguyen Ngoc Truong Chinh, CEO of GLS, explained. “Besides, we have been making a profit since the beginning of the year. Therefore, we hope everything can go smoothly.”
Dr. Tran Dac Sinh, chair of the HCM City Stock Exchange, said no licenses had been issued recently to securities companies.
vietnamnet
