The door of securities backed lending of commercial joint stock banks after the release of Instruction No 03 has become narrower for stock players due to the capital shortage. In order to maintain the repurchase (repo) service and development of securities mortgage lending, many brokers are racing to seek capital supply from banks.
The association of Agribank’s HCM City with its broker Agriseco and Au Viet Securities Co (AVSC) attracted other securities companies, especially those recently entered the domestic stock market. One week after signing a commitment to provide capital to Agriseco and AVSC to launch securities mortgage lending, tens of other brokers including Saigon Securities Inc (SSI), FPT Securities Co (FPTS) and Dai Viet Securities Co (DVSC) acquired Agribank’s capital to help their investors however the lender’s securities backed lending ratio is limited so it cannot meet all demands.
Calling for capital to lend investors is one of the most effective business strategies of brokerages at the moment. In comparison with foreign investors, capital supply for Vietnam’s securities businesses remains small. In fact, between the end of 2006 and the start of this year, the money amount sourced from bank loans investors poured into trading securities accounted for two third of total securities investment capital. Nguyen Ngoc Truong Chinh, deputy general director of Dong Duong Securities Co (DDS) said that his company now has a lending limit of two trillion dong from Agribank’s two branches to support their customers.
In addition, DDS has finished negotiations with Bidv’s Nam Ky Khoi Nghia Branch to call for additional capital equalling to half of Agribank’s lending limit for stock investors as it officially comes into full operation. Chinh said that thanks to Bidv and Agribank, DDS will provide securities mortgage loans to customers with a maximum limit of six billion dong each and the minimum level of 50 million dong within six months to one year at an interest rate of 1-1.1% a month.
Similarly, with 400 billion dong provided by Agribank’s HCM City, AVSC has not yet made investors feel satisfied because the number securities accounts opened in the broker is increasing sharply. One month after being opened, AVSC up to now has attracted 350 accounts. Thus AVSC is making efforts to seek securities backed loans from other local lenders including Bidv and VIB Bank to help customers.
Meanwhile, investors still are allowed to report shares and borrow securities mortgage loans at Vietnam International Securities Co (VIS) however the share value is appraised to be lower than previous due to capital supply of VIS’ associated banks is getting smaller, according to deputy general director Pham Linh. Some investors repurchased their shares at a price equalling to half of market price at an interest rate of 1-1.5% a month.
The race to seek securities backed loans from banks through cooperation of brokers and banks is booming, but securities backed lending limit of banks including state lenders has been blocked by the Instruction No 03.
Brokerages, investors and banks are waiting for SBV’s move and expect that the ruled 3% will be changed.