Up to now, almost all commercial joint stock banks have no longer offer loans to securities investors. However, as for state-run banks, this is a good opportunity to develop such a relatively fertilized service. Particularly, state-owned banks have recently lent much capital to investors through securities companies. Thus, there remains many opportunities left for securities investor circle to mortgage shares for loans although the deadline for banks to report securities lending ratios to the central bank is closely approaching.
On December 21, the Dong Duong Securities Trading Co (DDS) cooperated with the Bank for Agriculture and Rural Development of Vietnam (Agribank)-Mac Thi Buoi branch, to provide securities-backed loans. Accordingly, investors can borrow up to 50% of shares’ market prices with a monthly interest rate of 1.1%. As for loans against security, DDS cooperated with Agribank to lend up to 100% of shares’ market price with an interest rate of 1.1% a month. Additionally, DDS offered the repurchase agreements (repo) for unlisted shares. Furthermore, DDS coordinated with the Bank for Investment and Development of Vietnam (Bidv)-Nam Ky Khoi Nghia branch and is seeking more some banks in order to have more lending limit for investors.
The Gia Quyen Securities Co (EPS), although having just entered into the stock market, has quickly attracted a large number of customers thanks to the company’s utility services. Addition to advance investors money from share sales right after order matching, EPS has cooperated with the Vietnam Bank for Foreign Trade (Vietcombank) in order to assist investors. Le Minh Nga, finance director of EPS, said each investor can mortgage shares worth up to five billion dong for loans and can borrow up to 45% of shares’ market prices. As for advanced loans for share sales, EPS does not limit the maximum lending amount and investors can borrow up to 99% of shares’ value. EPS also allows investors mortgage almost all kinds of shares which are listed within six to 12 months. However, the list of shares will change based on different time.
In fact, capital for investors is running out of, which is partly due to impacts from the central bank’s tightening securities lending activities. Thus, offering securities loans is a great advantage for securities companies. By launching securities loans while the market is thirsty for capital, EPS will attach more attention from investors. EPS and five banks have so far signed agreements on assisting capital for investors to open accounts at the company.
Commercial joint stock banks said they have now stopped securities lending activities because the deadline for collecting securities loans is too urgent compared to the maturity in lending contracts signed with investors while securities lending ratios in some banks still exceed the allowed 3% of total outstanding loans. By December 25, there is only five days left for commercial joint stock banks to collect securities loans in order to cutting their securities lending ratio to below 3%. Therefore, capital of state-owned banks is considered the only opportunity for investors. Pham Thuy Nga, head of Vietcombank’s Policy and Product Development Department., said Vietcombank’s securities lending ratio is now only some 1% out of total outstanding loans, hence, there remain many opportunities for investors.
Besides EPS, in the upcoming time, Vietcombank will cooperate with many other securities companies in order to develop securities lending service, Nga said. However, Nga said, Vietcombank will follow the central bank’s policy. “That is, although Vietcombank’s securities lending ratio is below the regulated level, if the central bank ask to temporarily stop securities lending activities, the bank will follow,” explained Nga.
It is reported that Vietcombank is one of the latest banks among state-run banks in developing securities lending activities. EPS is also considered to be the first company that is allowed to use capital of Vietcombank.
Recently, the Saigon Securities Inc. (SSI)-Hanoi branch and Agribank’s transaction office have cooperated together to offer securities loans. On December 17, SSI and the transaction office of the VID Public Joint Venture Bank jointly offered loans mortgaged by listed shares.
The deadline for banks to report their securities lending ratios, December 31, is closely approaching, however, this does not mean that investors no longer have opportunity to borrow loans because there is much room for securities loans at state-owned banks. What is more, some commercial banks said that after raising total outstanding loans, they will continue developing such potential lending service.