It is expected that the number of securities companies would be cut down by 2/3 after the restructuring process. However, to date, no securities company has declared the bankruptcy.
A lot of companies caught in a shoal
SBS shares of Sacombank’s Securities Company have been put under the special control since July 23 on the HCM City bourse, because of the minus profit of 1424.14 billion dong, exceeding the stockholder equity by March 31, 2012.
Most recently, SBS, together with Golden Bridge Vietnam, have been imposed the fine of 30 million dong for the late 2011 finance report submission.
In 2011, SBS incurred the loss of 788 billion dong, topping the list of unprofitable securities companies. Meanwhile, in 2010, the company reported the profit of 101 billion dong. As a result, SBS, which was on the third position on the market, has been weeded out of the top 10 securities companies at the HCM City Stock Exchange.
By the end of the first quarter of 2012, the accumulative loss incurred by SBS had climbed to 660 billion dong, while its chartered capital had dropped to 1266 billion dong.
SME, HSSC, TSS and DDS are also the names repeatedly appearing on local newspapers these days. SME’s Chair and deputy Chair have been arrested. Prior to that, on February 10, the company stopped its transaction activities on both the Hanoi and HCM City bourses.
The Hanoi Stock Exchange has also made public a list of securities companies which are not eligible for margin trading by June 30, 2012, which includes AVS, APS, APG, SHS, PSI, SVS and many others. The companies have also been given warnings for the unprofitable business performance in 2011 and high accumulative loss.
The invisible value of the license
A paradox exists that while a lot of securities companies do not have more operations in reality, they have not declared bankruptcy. The answer lies in the invisible value of the business license.
Securities companies understand well that it is nearly impossible to obtain an operating license at this moment and the near future. Therefore, despite the big current difficulties, the securities companies still try to keep operation.
An official of the Hanoi Stock Exchange also said that even when securities companies lose all of their capital and continuously take loss, they would still have a valuable thing in hands – the operation license.
Since the State Securities Commission may not grant more licenses, while it has even decided to reduce the number of companies from 100 now to 30, the licenses would be invaluable.
The owners of unprofitable securities companies have every reason to hope that they would be able to sell the licenses to investors, who need them. Especially, foreign investors could be the potential buyers, after the watchdog agency releases the legal document on allowing the establishment of 100 percent foreign owned securities companies.
However, experts have warned that operational securities companies would have to fulfill a lot of duties, which means that even though retaining the operation licenses, weak securities companies can be sure that they still can keep the licenses until new opportunities turn up.
The opportunities in the post-crisis period
Commenting about the securities companies’ efforts to hold out in the current difficulties, Dr Pham The Anh, Chief Economist of the Thang Long Securities Company, said that securities companies still can see the opportunities to come after the crisis period is over. Therefore, it would be better to try to hold out to survive if they still can.
Anh also said that a lot of securities companies have been backed by commercial banks; therefore, they still can maintain their operation despite the bad business performance.
“Finance groups should not operate without securities companies. Therefore, they would keep injecting money in securities companies,” he said.