Vietnamese Banks Facing Challenges in Recovering Loans

Commercial banks in Vietnam are encountering difficulties in controlling investment loans for securities investors at below 3 per cent of total outstanding loans required by State Bank of Vietnam, the central bank.

 

Banks are now impossible to recover bank loans for securities investment as required by SBV before December 31, 2007, a banker who declined to be named said.

 

Banks have two choices now, said Bui Tuan Tai, ACB’s Deputy General Director, pointing out either raising their outstanding loans or reducing loans for securities investments.

 

The limiting loans for securities investments at the moment are unsuitable, said director of a HCM City-based joint stock bank. The stock market, after its correction period, has warmed up again, and investors will need more money for their investment when it is right time to buy in stocks.

 

The limitation would cause losses not only to bankers, securities investors, but also to the state as investors have no money to buy shares in IPOs in which the state acted as seller, the banker said.

 

While joint stock banks are worried with the cap of 3 per cent, other state-run banks still have more ‘room’ for securities loans. (Vnbourse, Vietnamnet)