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 Vietnam.
The new circular, effective October 29, stipulates that credit
institutions seeking to list shares will have to ensure compliance with
all financial safety regulations set for credit institutions for six
consecutive months prior to their listing application.
will also be required to implement loan classification and make
provision against credit risks as regulated by the central bank, as well
as organise internal audit and internal control divisions.
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 percent 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 percent for two quarters in a row," ACB Securities Co banking
industry analyst Cao Tan Phat told the newspaper Dau tu Chung khoan
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 percent of outstanding loans.
The Bank for Development and Investment of Vietnam (BIDV),
which applied in May to list shares on the Ho Chi Minh Stock Exchange,
also has a bad debt ratio of 3.29 percent in the second quarter of this
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.