The MOF effectively urges banks to get listed

31-Dec-2016 Intellasia | Dau Tu Chung Khoan | 6:00 AM Print This Post

As the year is ending, many public joint stock banks are rushing to proceed the listing of their shares. On December 12th 2016, the Vietnam Securities Depository (VSD) announced the grant of certificate of securities registration and securities code to the Vietnam International Joint Stock Commercial Bank (code: VIB). The number of registered shares is 564,442,500 units, equivalent to more than 5.644 trillion dong of charter capital.

This is the procedure to prepare for VIB stock to be traded on the Unlisted Public Company Market (UPCoM) in early 2017. Previously, at the 2016 annual shareholders meeting held in April 2016, shareholders of VIB approved the proposal of the bank’s Board of directors for listing VIB shares on the stock market in 2018.

According to Han Ngoc Vu, VIB’s general director, getting the stock traded on the UPCoM at the current time is complying with regulations of the State Bank of Vietnam (SBV) under Circular 180/TT-BTC of the Ministry of Finance (MOF) which stipulated that public companies must list their stocks on the bourse before the date of December 31st 2016. Vu stressed that this will help investors to have more sufficient information about the share prices and market capitalisation as well as liquidity level, thereby facilitating investors to easily make investment decision. When the shares are traded on the centralised market, buyers and sellers will meet with less difficulty, whether it is primary or secondary trading.

The Vietnam Prosperity Commercial Joint Stock Bank (VPBank) has also sent feedback card consulting its shareholders about the share listing. Two options were given, including (1) to register the shares for trading on the UPCoM and (2) to list the shares on the official stock exchange. A leader of VPBank shared that listing shares on the official stock market has more advantages than the other option, but the preparation of documents may take longer time. Thus, VPBank wants to suggest shareholders the option to trade the shares on the UPCoM before completing the procedures for the official listing. If receiving shareholders’ approval, VPBank will immediately carry out procedures to register the shares in order to meet the current regulations.

It should be noted that in early 2015, SBV’s Governor issued Document 657/NHNN-TTGSNH to urge banks to conduct listing but the progress remains very slow.

The decision to get listed of VIB not only comes from the pressure of complying with the MOF’s Circular 180 but according to the bank’s general director, it also based on VIB’s analysis of the market’s appetite for securities investment in general and the investment in VIB shares in particular, in the context when the economy is maintaining a stable growth, inflation and interest rates are controlled at low levels, the exchange rate of dong is kept stable, and investors are having positive outlook about the prospects of the stock market of Vietnam.

Vu added that, VIB is currently one of the Vietnamese banks having the highest Capital Adequacy Ratio (CAR), reaching about 15.61 percent as of the end of the third quarter of 2016. Nevertheless, VIB should start the preparation from now for raising capital in the near future as the bank’s assets and lending growth have continuously been very positive at about 25 percent in two consecutive years and are expected to continue developing at this rate in the following year.

The overall report on financial market situation in 2016 of the National Financial Supervisory Commission stated that the stock market reflected investors’ confidence in the market recovery prospects as well as the determination of the government in supporting business and maintaining economic stability. The VN Index in late 2016 has exceeded the peak level of 660 points recorded in 2009. In addition, the total market capitalisation of the stock market is estimated to have increased from 32.4 percent of Gross Domestic Product (GDP) in 2015 to 40 percent of GDP in 2016. A leader of the NFSC commented that this will be the motivation for banks to be more confident in getting listed on the stock exchanges.

Meanwhile, from the perspective of an economic expert, the pressure to increase capital to prepare for the application Basel II standards has forced banks to proceed the listing as soon as possible.

 


Category: Finance, Vietnam

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