Banks will have to buy more Government bonds
Banks will have to buy more Government bonds
Banks participating in auctions of Government bonds will be under obligation to buy a minimum of VND4.5 trillion (US$200 million) in total from November 1, 2016 to October 31, 2017, according to the latest draft decision by the Ministry of Finance.
In the previous period, the minimum value of Government bonds that branches of foreign banks had to buy was VND3 trillion and VND4.3 trillion for State-owned, joint stock, joint venture and wholly foreign-owned commercial banks.
With this adjustment, the number of bidders joining the auctions this year was expected to reduce from 24 to 22.
The obligation of securities companies joining these auctions was the same as the previous period in the draft, at VND2 trillion.
Bidders must ensure that at least 70 per cent of the minimum amount of bonds they have to buy are of a maturity term from five years.
In addition, they must participate in at least 60 per cent of the total number of auctions.
Late in May, the State Bank issued a circular which raised the ratio of investments in Governments bonds to short-term capitals of branches of foreign banks from 15 per cent to 35 per cent and State commercial banks from 15 per cent to 25 per cent, which pushed up demand for Government bonds.
Statistics showed that around 80 per cent of the bonds were bought by commercial banks.
As of December 7, the State treasury raised more than VND280 trillion from auctioning Government bonds, fulfilling the goal for the full year.
