Banks pump capital into stock market
04-OCT-2008 Intellasia | 01/Oct/2008 Dau Tu Chung Khoan page 14
Oct 4, 2008 - 7:00:00 AM
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With the surplus of available capital, banks with the credit growth of less than the ruled 30% continued implementing the securities backed lending. However, banks' lending terms now are more tightened while investors are not much attracted by capital borrowing.
From September 1, EuroCapital Securities Joint Stock Co in combination with Bank for Investment and Development of Vietnam (Bidv) launched the listed securities mortgage lending. Customers can mortgage their listed shares in six months from the disbursement day until December 31, 2008 with an interest rate based on the market movement. These shares totally belong to mortgagers and the chartered capital of listed firms at STC and HASTC up to the lending time is at least 30 billion dong. The securities list will be announced everyday by EuroCapital. The lending limit for each customer is no more than three billion dong.
In the start of September, FPT Securities Joint Stock Co (FPTS) also cooperated with Bidv to restart the service of supporting the listed securities mortgage lending. The share codes subject to the programme must have the market price of over 30,000 dong per share, undergo at least 20 sessions, and have the daily trading volume of over 5,000 shares. Minimum lending limit for each application is 50 million dong with the interest rate of 20% per annum and the longest term of three months.
As surveyed by Dau Tu Chung Khoan, there are now about 10 brokers launching the securities mortgage and repurchase service with the capital supply from large sized banks and stricter lending terms. Previously, up to a half of listed shares on both floors can meet the mortgage terms so now the figure is only 100 out of more than 300 listed codes under consideration. These shares are divided into many grades and lending value is built based on that grade.
According to Dang Quang Son, EuroCapital broker's Customer Service Division manager, as for securities mortgage service, most of investors are interested in profit opportunities along with lending rates. Therefore, the demand for securities mortgage has not been high yet. Mainly some big customers that have a fairly stable securities investment portfolio for a long-term will be keen on the service more than short-term investors.
Agreeing with the above point of view, Nguyen Van Dung, FPTS Co's brokerage director said, at this time when the movements of stock market cannot predicted, not many small investors pay attention to securities mortgage service. Lending rate of securities mortgage service as for these investors does not matter because when the stock market is comfortable, some investors still can gain earnings despite the lending rate of 6% a month.
From previous lessons, banks' lending terms now are stricter and there always have frequent information exchange between bank and broker. The highest mortgage value is only 40% of market price of shares instead of the previous 60% while the lending time is shortened from 6 month-one-year down to three months. Dung added, with the stock trading amplitude of 5-7%, the transparency of the stock market is acceptable because banks totally can pour more money into the market. Typically, Bidv granted FPTS a mortgage-lending limit of up to 100 billion dong.
In aspect of management, Le Xuan Nghia, head of SBV's Policy Strategy Department spoke that the monetary policy administration at the moment created conditions for banks to gain initiatives in launching lending services.
Keeping basic rates while increasing deposit rates of compulsory reserve and allowing the discount of statutory T-bills have helped commercial banks restructure term interest rates and risks.
Commercial banks can launch consumer lending and securities backed lending (within the allowable limit) with the high interest rate of 20-21% pa while they can adjust lending service down to 16-17% pa as for business and production companies.
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