To date, share mortgage loans and loans for stock trading at commercial banks have accounted for about 2% of total outstanding loans of the whole banking system, equivalent to 1.5-1.6 trillion dong, said Le Duc Thuy, governor of the State Bank of Vietnam.
According to Thuy, the total amount of loans for stock trading in Vietnam is still relatively small. So if there is any plunge in the country’s stock markets, it should not adversely affect the banking system.
Thuy stressed that loans for stock investments are always riskier than other lending types given that the stock market always fluctuates unpredictably, especially as Vietnam’s emerging stock market. Therefore, the State Bank of Vietnam has released a series of official documents to remind credit institutions and request those to take caution in stock investment lending.
Share mortgage lending is the right of credit institutions and these credit institutions have the right to valuate assets to lend much or little to stock investments.
However, the central bank also reminded that commercial banks should take caution in valuation and mortgaging of assets. Currently, most of banks all offer loans that have the far lower value than the value of shares mortgaged at banks.
Particularly, the SBV governor said that commercial banks must not use deposits to lend to their affiliated securities companies to invest in securities. This trading channel sees big risks. If a bank sets up its own securities company and then uses its deposits to invest through the securities company, this means this bank does not separate prudent ratios in the performance between securities company and its banking operations. “The SBV will definitely not allow banks to do so,” stressed Thuy.
Currently, the SBV is urgently building new rules on stock investment lending and stock mortgage loans. “Now, we are in the progress of building and discussing the new rules on lending to this stock investment field, so we cannot provide sufficient information on these rules at the moment,” said Thuy.