Statistics of State Bank of Vietnam shows that the capital raising growth of commercial banks has recently declined sharply. On average in six weeks from September to the first half of October, the capital mobilisation of entire banking system only grew by 1.6 percent despite the deposit rates increased by full allowable band.
Meanwhile, according to some banks, in the current deposit structure, demand and short term deposits are dominating long term deposits, meaning that people prefer depositing money in short terms at banks. Commercial banks are forced to reserve a larger volume of money for payment so they are short on capital for long term lending as well as other business operations.
Despite difficulties in capital, the Central Bank still confirmed it will not loosen monetary policies and commercial banks will have to ensure regulations on capital safety.
It is predicted that the scarcity of medium and long term capital in the rest of 2009 and start of 2010 could happen so commercial banks are switching to different ways to attract capital through giving a number of special preferences to long term depositors.
Also, many banks are fond of raising capital via bond issue.
Techcombank lately issued 2.1 trillion dong of first tranche bonds of 2009 with the fixed coupon rate of 10.5 percent pa for the first year. Habubank also issued long term bonds worth total 2.5 trillion dong on par. Last month, Habubank succeeded in offering one trillion dong of 2-year bonds to domestic enterprises to raise capital for new projects and asset and debt restructure till the year end.
A representative from Habubank said, between now and 2009 end, the bank will consider following issues depending on capital demand and business situation after obtaining SBV’s permission.
Similarly, Vietnam International Commercial JS Bank (VIB) reported issuing successfully over 1.33 trillion dong of bonds to finance companies, fund management firms and insurers.
Previously, Bidv had sold 1.362 trillion dong of first phase long term bonds to domestic and foreign institutions.
Talking with Dau Tu Chung Khoan newspaper, a Hanoi based bank official admitted, issuing bonds successfully is not easy while the market has many issuers.