Vietnamplus

After 25 years of development, the Vietnamese stock market is playing a more important role in attracting capital, supporting the commercial banking system. Therefore the target is to turn the market into the main channel of medium and long-term capital for the economy.

A number of banks have increased bond issuance to attract mid-term and long-term capital, leading to changes in capital mobilisation in the corporate bond market in the second quarter.

Rising medium- and long-term capital demands to meet stricter regulations on credit safety limits and capital adequacy early next year were putting pressure on commercial banks to issue bonds in the final months of the year, experts said.

Profit growth of Vietnamese banks in 2019 is forecast to be lower than last year, but experts say this should not be cause for concern.

Banks have increased their interest rates on certificates of deposit (CDs), bringing them in excess of 10 percent per year with the aim of mobilising long-term capital.

Local banks have raised their interest rates in a move to attract depositors and increase their medium- and long-term capital.

Bond issuance is becoming a popular channel for firms to raise capital for its efficiency and convenience.

Local banks have continued issuing a large amount of bonds to raise capital to meet the State Bank of Vietnam (SBV)’s stricter regulations on credit safety limits and capital adequacy.

Experts made proposals to unchain medium- and long-term capital for the private economic sector so as to boost national socio-economic development.

Banks have to mobilise long-term capital at high costs by issuing certificates of deposit (CD) in Vietnamese dong with high interest rates to lure depositors, causing concerns about a domino effect on lending rates.

Prime Minister Nguyen Xuan Phuc has approved a project to restructure the stock market until 2020 with a vision to 2025, with an aim to make it an important channel for middle- and long-term capital regulation.

The new amended draft law on securities was revised based on the inheritance of the current Securities Law, broadening the scope of regulation and adopting a new approach more suited to market condition and overcoming the remaining limitations of the current law.

Struggling to attract domestic funds, banks are rushing to seek foreign capital ahead of the central bank’s tightened policy on medium- and long-term lending early next year.

High interest rates and insufficient medium-long term capital have hindered the growth of the real estate market.

The shortage of long-term capital coupled with low competitiveness should be blamed for the rising number of firms going bankrupt and temporarily halting operations in the first quarter of 2016.

Some commercial banks have recently taken international loans to meet their long-term capital demands.