Forex market stable, no dollar shortage: official

Vietnam’s foreign exchange market has been stable sine March and commercial banks have a surplus of dollars, a central bank official said, rejecting dollar shortage concerns.

“All banks reported that foreign exchange demand has not increased rapidly recently,” Nguyen Quang Huy, director of the State Bank of Vietnam's foreign exchange department, said in an interview published by the Vietnam News Agency Thursday.

“Rumors about companies hoarding US dollars on forex rate concerns are groundless,” he said.

Banks now have plenty of dollar funds, Huy said, noting that they have made dollar swap deals with the central bank worth a total of around US$600 million.

All sources of forex inflows have been rising this year, including foreign investment, overseas remittances and tourism revenues, he said, citing figures from the central bank.

Overseas remittances, for instance, are expected to reach $3.6 billion after rising 30.5 percent in the first quarter, he said.

“Together with a determination in curbing the trade deficit, the increase in foreign exchange inflows will help the government improve the country’s balance of payments this year,” Huy said.

Loans rose 1.86 percent in May alone, during which period dollar loans rose 3.16 percent, according to the central bank.

As interest rates on dollar loans were lower than the rates on dong loans, many companies shifted to dollar loans, Huy said. However he said the growth of dollar loans was not too high and still “within control.”

Source: thanhniennews.com

Banks vow lower interest rates

HCM CITY — Commercial banks have committed to continue adjusting their interest rates next month to ensure that the lending interest rate will stand at 12 per cent per annum and deposit rates at 10 per cent.

The banks made the commitment at a meeting last Friday in Ha Noi with Governor Nguyen Van Giau of the State Bank of Viet Nam.

Participants in the event were five general directors of the State-run commercial banks and representatives of some major commercial joint-stock banks, namely the Asia Commercial Joint Stock Bank (ACB), the Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank), the Export-Import Commercial Joint Stock Bank (Eximbank), the Viet Nam Commercial Commercial Joint Stock Bank for Industry and Trade (VietinBank), and the Military Commercial Joint Stock Bank (MB).

All the bank leaders said that interest rate cuts were needed for credit institutions to effectively use mobilised capital sources and make higher profits.

They said assistance from the Government and a consensus among the banks would help them cut interest rates in early July.

Most commercial banks in recent months have made efforts to reduce interest rates on loans.

Top priority has been given to individuals and enterprises involved in industries suggested by the Government. They include companies involved in agriculture and rural production, exporters, and small-and medium-sized enterprises.

The Joint-Stock Commercial Bank for Foreign Trade of Viet Nam and the Bank for Investment and Development of Viet Nam offered priority cases of interest rates of only 12 per cent per annum.

The 12.5-per-cent rate was applied by the Agriculture and Rural Development Bank and the Mekong Housing Development Bank. Other commercial joint stock banks have used 13 per cent per year.

Based on these results, the bank leaders agreed to a new interest rate cut plan under which major commercial banks would immediately cut interest rates of loans in Vietnamese dong to 12 or 12.5 per cent per year for priority areas.

Other commercial banks would have to try to realise this target in a short time.

In regard to deposit interest rates, bank leaders have committed to make interest cuts within three months, from the current 11.5 per cent per year to 11 per cent immediately, and to 10.2 or 10.5 per cent by late September.

Governor Giau said the central bank would continue to carry out measures, mostly monetary tools, to actively regulate market interest rates so they would fall.

He asked commercial banks not to hand out bonuses and other gifts that could increase interest rates, and to ensure a consensus among banks.

Source: saigonmoney.com

Agribank opens first branch in Cambodia

The Vietnam Bank for Agriculture and Rural Development (Agribank) opened its branch in Phnom Penh – the first of its kind in Cambodia – in a bid to tap this potential market.

We hope to provide Cambodian people with modern and convenient banking services and create better conditions for Vietnamese investors in Cambodia, said Agribank President Nguyen The Binh at the opening ceremony.

Binh said the opening of the branch demonstrated Agribank’s efforts to implement the Vietnamese government’s policy of increasing bilateral cooperation with Cambodia, especially in finance and banking.

At the event, Agribank granted US$100,000 to the Cambodian Government to support social activities.

Established in 1988, Agribank is one of Vietnam’s biggest financial institutions with a total asset capital of US$26 billion and more than 2,300 branches. It has conducted business with 1,000 banks in 96

Source: saigonmoney.com

Capital hike could mean more, not less risk: bankers

Bankers say the higher capital requirement imposed by the central bank may prove counterproductive by bringing even more risk to the banking system.

Hoang Van Toan, chairman of Dai Tin Bank (TRUSTBank), said the bank has secured approval to raise its registered capital to VND3 trillion from the current VND2 trillion.

The capital increase is to meet a new regulation that requires commercial banks to raise their capital to at least VND3 trillion (US$158.7 million) by the end of this year, which is triple the current minimum level of VND1 trillion. The central bank had said the measure is aimed at ensuring the safety of financial institutions.

However, Toan said capital increase does not necessarily mean improved safety.

The capital adequacy ratio has been standardized in accordance with international regulations to reflect the safety of a bank. So if the central bank wants to toughen safety standards, it can just raise the ratio for local banks to, for instance, 12 percent, he said.

Once a required ratio has been set, banks can either raise capital or downsize their operations. Those unable to meet the capital adequacy ratio can be forced to close or merge with other banks, Toan said.

The State Bank of Vietnam had said last month that it will raise the capital adequacy ratio for financial institutions and banks to 9 percent from 8 percent, starting on October 1. It also announced its intention to require higher capital requirements in the future. The plan is to increase the minimum capital requirement to VND5 trillion ($263.8 million) by 2012 and further double it in 2015.

But Thomas Tobin, CEO of HSBC Vietnam, said such requirements were too much and too soon.

Tobin said the Banking Work Group, which comprises 30 international financial companies operating in Vietnam, agreed that it was necessary to have minimum capital requirements to protect the market as well as the clients, but said the levels must be considered carefully.

A minimum chartered capital is required to ensure new banks are able to operate safely and grow, and large capital is also needed when the market is not stable. But after all, the capital level should match the size of each bank, he said.

Another banker who wished to remain unnamed said forcing banks to raise capital in a very short time was like upgrading small boats and making them go out to the big sea. “Will it be safer that way?” the banker asked.

The bankers warned that after commercial banks raised their capital, they may want to expand their business and take higher risks to ensure profits. This would increase the risk for the whole banking system, for instance, if small banks try to attract deposits too quickly and then struggle to find clients for loans, they said.

The general director of a bank in Ho Chi Minh City suggested banks without enough capital are given more time to improve their business. During that time their operations can be restricted to certain cities and provinces, he said.

This is a measure that can be taken before compelling small banks to merge, he said.

Source: thanhniennews.com

Insurance Market Promises Strong Growth

Although 2009 was not an easy year for any business sector, life insurers still posted very good results with growth of 14% in total premiums. Therefore, 2010, which promises to see a strong recovery of the local economy, will also be a good year for general insurance companies to widen their operations and meet their business ambitions.

In early 2009, as the global financial crisis hit the local economy, hardly any enterprises dared to set high business targets and almost all investment channels went through a dreary period. At that time, banks drastically lowered their interest rates, the real estate market froze and the stock market plunged to a bottom of 235 points, but insurers still had to ensure interest rates of about 5% to 8% per year for policyholders during the contract period.

However, general insurers still managed not only to maintain their existing operations but also to launch new products and to post good business results by the end of the year. According to the Association of Vietnamese Insurers, the life insurance industry achieved VND11.86 trillion in premium turnover, an increase of 14% from the previous year with 4.26 million general insurance policies, a 10.2% growth rate compared to 2008. Of these policies, new contracts amounted to about 758,900, up by over one-third from a year earlier.

Despite the difficult year, the number of insurance agents also increased by one-third to over 94,600 by the end of 2009. Of those, Prudential had the largest number with over 33,300, Bao Viet was next with 18,150, and Dai-ichi Life was third with nearly 11,100.

In terms of premiums, according to the Association of Vietnamese Insurers, big names continued to hold the leading positions in 2009 as Prudential led the market with VND4.73 trillion, Bao Viet ranked second with VND3.72 trillion and Manulife was next with VND1.26 trillion. Those were also the same positions in terms of premiums on new policies.

Commenting on last year’s results, Jack Howell, CEO of Prudential Vietnam Assurance, said: “We had a very good year in 2009, with a very strong increase in APE (annual premium equivalent) and total premiums, the number of policies and agents, and case size.” With strong support from Prudential Plc plus a set of strategic focuses in Vietnam, Prudential Vietnam Assurance has successfully sustained its position as the market leader in life insurance in Vietnam, he added.

Other companies also posted two-digit growth last year. Manulife Vietnam reported 25% growth in new premium value. Meanwhile, ACE Life Vietnam said it achieved growth of 60% in premiums last year.

Another foreign insurer, Dai-ichi Life Vietnam, obtained VND744 billion from insurance premiums last year, with new policies increasing by 39%. This was the second straight year the Japanese-invested company posted profits from the local market in three years of operation.

Ambitious plans for 2010

Given such successes in the local market, insurers are setting even higher targets this year. In 2010, besides expanding agent networks and improving products, insurance companies said they would continue training and developing their agents to be more professional because of the important role agents play in explaining the usage of each insurance product as well as in taking care of customers during the contract period.

Howell of Prudential Vietnam presented an ambitious plan for this year as he said the company is planning to achieve a strong double-digit growth rate by increasing the number of agents and offices and improving productivity through innovative training programs. “We will continue to be a market leader in profitable, growing product segments with a strong focus on unit-linked and protection products while protecting the margins,” he added.
The company will also deliver superior customer service by improving key service areas including premium collection, customer communication, orphan customer management and claim processing, said Howell.

The representative of ACE Life said that the company is highly aware that every good product can be imitated, but service quality and human resources cannot. ACE Life now has enough products to meet local insurance demands, so what the company has to do this year is to develop human resources and enhance service quality, the source said.

Meanwhile, for Manulife who is one of the top three life insurance companies, developing products to meet the diverse demands of people in Vietnam will be the next significant step to deepen its presence here. The firm’s market share is 10%, so it hopes to double the figure in the next five years, according to the company’s leader.

Carl Gustini, CEO of Manulife Vietnam, said: “In Vietnam, a key part of our strategy is geographic and product diversification. We want to be able to serve all Vietnamese people. We will continue to develop innovative products meeting the specific needs of all customer segments, especially mixed products offering both investment and insurance protection.”

Vietnam’s economy is predicted to be one of the fastest growing ones among ASEAN countries in the decade to come. This means there will be an emerging middle class with higher disposable incomes, so the demand for better healthcare services will increase, Gustini said. “Therefore, there will be a huge need for medical and hospital insurance. Investment and healthcare products will be our immediate focus, and pension plans and retirement product development will follow,” he revealed.

Meanwhile, Japanese-invested insurer Dai-ichi Life Vietnam wants to combine developing service quality with diversifying products to meet the target of increasing its market share in Vietnam.

Dai-ichi Mutual Life Insurance Co. acquired Bao Minh-CMG joint venture in 2007 to establish Dai-ichi Life Vietnam. It expanded its market share from 4.8% to around 7% in 2009 and plans to serve 8% of the market this year, then increase the figure to 10% in two years.

To reach these targets, Dai-ichi Life Vietnam plans to improve the human resources in its agent system and launch more products this year to meet various demands. “We hope that our agents will be pioneers in Vietnam in using netbooks with new software to provide consultancy for customers,” Dai-ichi Life Vietnam general director Takashi Fujii said.

The company is the first insurer in Vietnam to use insurance request forms with five questions instead of 31. It has also had Japanese experts design documents in the style of Japanese comic books to help customers learn about complicated financial concepts.

The pie is still big

Most insurance companies entering Vietnam say that the local insurance market has yet to develop to its potential. Therefore, besides the old names, the market in recent years has welcomed new insurers such as Korea Life Insurance (Vietnam) and Great Eastern Life (Vietnam).

The representative of Prudential Vietnam pinned high hope on economic growth as he said that Vietnam would continue to be a high-growth market. “With the entrance of more players in the market, more consumers will be able to appreciate the benefits of life insurance and learn how life insurance can help them secure their future,” CEO Jack Howell said.

Meanwhile, Gustini of Manulife said that the life insurance market was just in its infancy, as industry revenues currently make up just 2% of the country’s gross domestic product (GDP) while the share in developed countries is usually 8-15% of GDP.

“Figures from the Ministry of Finance show that about only 5% of the population has life insurance, much lower than in other developing countries, which have over 30% penetration rates. So, Vietnam represents a promising market with great potential and it is expected that the life insurance sector will continue to grow at double-digit rates in 2010,” he added.

Some new market entrants have emerged and more will come because Vietnam is seen by many as a highly attractive market and this will raise standards and benefit consumers, the CEO of Manulife said.

“The challenge though is how we can maintain healthy competition. This is an area in which the industry and the regulators will have to work closely together to ensure the healthy and proper development of the Vietnamese insurance market,” he concluded.

Source: saigonmoney.com

Deposit interest rates expected to go down in the coming months

Commercial banks are still paying high rates at 11.5 percent per annum for dong deposits, but bankers said interest rates will go down in several months.

Viet A Bank, which once raised the deposit interest rate to a very high level, at 11.8 percent per annum, has lowered the interest rate after the State Bank of Vietnam threatened to inspect banks peddling overly high interest rates. The bank is now offering an interest rate of 11.5 percent for many kinds of deposits, a level Viet A and many other banks have committed to implementing.

Vietinbank is now offering the same interest rate of 11.5 percent for 1-36 month deposits.

With the exception of some commercial banks still offering high deposit interest rates of 11.5 percent, many banks are quoting deposit interest rates at levels lower than 11.5 percent, including Dai Tin, An Binh Bank, VP Bank and ACB.

The director of a joint stock bank in the north said that recently, many banks have tried to borrow capital on the interbank market. However, the State Bank then requested these banks reduce the volume of capital they had borrowed from the interbank market. Therefore, these banks had to offer high deposit interest rates in order to attract more capital to offset borrowings on the interbank market

However, the director said the State Bank has announced it will give support to these banks, which means there is high hope that the deposit interest rate will go down in several months.

Nguyen Hung, General Director of VP Bank, said that two months ago, depositors and banks regularly negotiated about deposit interest rates. In many cases, as banks seriously lacked capital, they had to pay the interest rates demanded by big depositors. However, this trend has largely disappeared.

Moreover, interest rates on the interbank market have been decreasing, making it easier to borrow capital through the open market operation (OMO). Therefore, according to Hung, there is reason to believe deposit interest rates will decrease in the near future.

The government bond interest rate has been lowered to 10-10.5 percent, serving as the benchmark for the rest of the market. Some commercial banks joined the latest Government bond bidding June 17. The Treasury only put forth a bid of 1000 billion dong worth of three-year bonds and 1000 billion dong worth of five year bonds, while commercial banks registered to buy 6720 billion dong worth of three-year bonds and 3600 billion dong worth of five year bonds. All the Government bonds put forth for bidding June 17 were sold at an interest rate of 10.6 percent for three-year bonds and 10.95 percent for five-year bonds.

This, according to experts, showed that banks’ capital is now profuse and they have money to purchase bonds. Therefore, experts say, there is reason to believe deposit interest rates will go down in the time to come.

Source: saigonmoney.com

Nam A Bank finishes core banking project

HCMC – Nam A Commercial Bank has just finished deployment of the core banking project that will enable the bank to launch new products and services in coming time.

Nam A Bank has cooperated with partners such as Oracle, HP, FPT, and Ocean Technology to carry out the project since March last year. Total investment capital of the project is US$4.5 million, said the company at a function on Tuesday to announce the completion of the project.

With the new technology, the IT system at the bank’s headquarters is directly connected with systems of its branches and transaction offices so the bank can offer diversified services to customers such as payment, money transfer, Internet Banking, Mobile Banking, and ATM system.

Given the core banking system, Nam A Bank expects to issue ATM cards nationwide in the third quarter this year in connection with big card systems such as Banknetvn, VNBC, and Smartlink.

The bank has got approval from the State Bank of Vietnam to increase its capital from VND1.25 trillion to VND2 trillion and has submitted the plan to further spur its capital to VND3 trillion within this year as required.

Source: saigonmoney.com

Non-cash payment via banks seen increasing

HCMC – As three local card networks of Smartlink, VNBC, and Banknetvn have connected with each other, lenders expects non-cash payment made via banks would increase strongly in the future.

Nguyen Van Dung, deputy director of the central bank’s HCMC Branch, told the Daily that the future trend would be payment via banks because lenders had connected their automated teller machine (ATM) systems, which would be the basis to develop points of sale (POS) network in the future.

“Banks’ infrastructure now absolutely enables the POS connection, the remaining problem is the fee between banks,” Dung said.

Ly Thi Ngoc, director of DongA Commercial Bank’s card center, said that given the connection through banks’ ATM systems, banks would share the POS network as one machine can accept different kinds of cards issued by different banks, helping them to cut cost when developing the POS network. That would help banks to widen the POS network in the country, she said.

In addition, money transfer among different banks via ATM would be a certain trend in the future.

Ngoc said DongA Bank has researched to deploy cross money transfer between banks in the VNBC network first which would become truth in the near future. At that time, customers of the VNBC network can transfer money to each others.

Besides payment via ATM, banks have developed payment via other channels such as mobile banking and Internet banking to encourage customers to reduce payment transaction by cash under the Government’s instruction. Those services have attracted many customers.

Le Huynh Ha, head of ATM services at Vietcombank’s HCMC Branch, said that payment revenue via cards of the branch’s customers was now three times bigger than before Tet Holiday. The amount is even six-fold bigger when the banks launched promotion for customers doing payment via cards, he said.

Currently, Vietcombank’s card holders can pay electricity and water bills at the bank’s ATM.

Dung from the central bank’s HCMC branch said that a preliminary report showed payment revenue via banks’ card accounts in 2009 was nearly five times bigger than in 2005, proving the trend of payment via banks.

However, to encourage institutions accepting card payment, the Government should have preferential policy such as lower corporate tax. At this time, when customers pay bills via a bank’s card, the sellers have to pay an amount of money to the bank, which discourages them to accept card payment.

According to Vietnam Banks Association, by early this month, Vietnam has 24 million card holders with 48 issuers, 11,000 ATM, and 38,000 points of sales nationwide.

Source: saigonmoney.com

Sacombank’s Cambodia branch injects more capital

HCMC – Saigon Thuong Tin Commercial Bank (Sacombank) has announced to increase the capital of its Cambodia branch from US$15 million to US$38 million as required by Cambodian rules.

After one year of operation in Cambodia, Sacombank now has 650 customers in Phnom Penh where its branch is located and other provinces such as Takeo and Kampong Cham.

The bank provides 23 services in Cambodia, including deposit taking, lending, settlement of payments, underwriting and money transfer.

Money transfer revenue between Vietnam and Cambodia via Sacombank has amounted to US$126 million to date given the bank’s express service, which takes only one hour.

To mark one year in Cambodia, Sacombank organized a run in Phnom Penh on June 20 with 300 people taking part, which will be turned into an annual event of the bank in the neighboring country.

Source: saigonmoney.com

Vietnam’s banks agree to lower deposit, lending rates

Vietnam’s commercial banks including Asia Commercial Bank agreed to lower interest rates in July to try to help the government meet a target for economic growth.

Lending rates will be lowered to about 12 percent and deposit rates to about 10 percent, according to a statement on the State Bank of Vietnam’s website Friday. Lending rates are currently as high as 14.5 percent, and deposit rates are as high as 11.5 percent, the central bank said June 21 on its website.

State Bank of Vietnam Deputy Governor Nguyen Van Binh said this month the central bank would try to cut borrowing costs at the government’s request as interest rates are still “high” and eroding corporate profits. The government is targeting 6.5 percent economic growth this year, up from 5.3 percent in 2009.

The proposed cuts are “essential for the economy and the banking system,” according to Friday’s statement, which cited unidentified general directors.

The central bank said yesterday that it would leave the benchmark interest rate at 8 percent in July. Inflation slowed for a third month in June as food prices eased, government data show. Consumer prices rose 8.69 percent from a year earlier, after exceeding 9 percent over the previous three months.

Source: saigonmoney.com

Banking forum eyes electronic payments

The annual Banking Viet Nam conference opened in Ha Noi yesterday with a focus this year on boosting electronic payment systems in Viet Nam and other ways to revolutionise banking technology.

"The major aim of this conference is to put a stress on strategic issues relating to technology development in the banking system through 2020," State Bank of Viet Nam deputy governor Nguyen Toan Thang told the opening of the conference.

The two-day event, under the theme of Modernising Banking on the Threshold of Economic Recovery, was expected to explore such areas as automated banking services, data security and risk management, with the target of introducing the latest and most modern IT applications in banking governance and services.

On the opening day, delegates placed strong focus on measures to increase the use of electronic payment systems in Viet Nam.

So far, there were about 10,000 ATMs, 36,000 point-of-sale (POS) stations and 22 million bank cards in circulation, connected by networks such as Banknetvn and Smartlink, noted the head of the State Bank of Viet Nam's payment department, Bui Quang Tien.

But non-cash payments were still the exception rather than the rule in Viet Nam, Tien said, suggesting that the legal system, and the habits of authorities, companies and the general public perpetuated the use of cash.

Tien said that the State Bank and other relevant authorities would continue to perfect a legal framework from electronic payments, as well as attempt to better co-ordinate POS systems, boost online and phone banking services and encourage commercial banks to offer new products supporting electronic payments.

Delegates also discussed measures to better ensure the safety and security of banking operations.

"Viet Nam should focus on risk management and system resilience in order to ensure system stability," said Saloni Ramakrishna, principal architect of enterprise analytics for Oracle Financial Services.

A showcase of products and services offered by 40 domestic and international credit institutions and IT firms was taking place on the sidelines of the conference.

The showcase also introduced an automated banking model that would include the participation of seven commercial banks, including Agribank, the Bank for Investment and Development of Viet Nam (BIDV), Vietinbank. Techcombank and Vietcombank.

Source: vietnamnews

Small banks face higher capital countdown

Small commercial banks, who do not have VND3 trillion (US$160 million) in capital, will have to submit their plans to the central bank before the end of this month to increase their capital to that level.

Around 20 of them, all joint stock banks, will have to do so and raise the required capital by year-end.

State Bank of Viet Nam Governor Nguyen Van Giau has recently announced a roadmap for further augmenting capital to VND5 trillion and then VND10 trillion in a few years, which will mean more banks will have to get cracking.

But things cannot be more loaded against someone trying to issue shares.

The stock market remains gloomy, with the VN-Index hovering around the 500-point mark, more often below it.

Banking shares are no longer popular with investors, especially those of banks performing poorly.

To cap it all, Dragon Capital has begun to divest its 19 million shares in Sacombank this month. The share is a leader in terms of liquidity at the HCM Stock Exchange. Military Bank, which also sees huge trading volumes on the informal OTC market, is all set to list. These two large banks threaten to cut the ground from under the feet of the smaller ones.

Ownership rates for individuals and institutions have been falling, respectively reaching 10 per cent and 20 per cent last year, and could fall further to 5 per cent and 15 per cent next year under a bill on lending institutions. The central bank wants to head off any possible domination of a bank by a small group of shareholders.

Thus, those with the capacity to invest may be disqualified while others who are eligible may not have the money.

Nevertheless, several banks like Dai A and Mien Tay are going ahead with preparations to list, expecting it would help raise funds.

Banks that cannot raise the additional capital face liquidation or merger.

M&A activity picks up

Son Ha, a company listed in HCM City with interests in mechanical engineering, renewable energy, and property, is likely to sign a contract to sell stakes to a strategic partner tomorrow.

It will issue 10 million shares to increase its chartered capital to VND250 billion (US$13 million) from the current VND150 billion.

This follows a busy week of mergers and acquisitions.

Last Wednesday the Sai Gon Metropolitan Ltd, the foreign partner in the firm that built the Sai Gon Metropolitan office building in HCM City, announced it would buy out the 30 per cent stake held by its local partner, Binh Minh Construction Company.

This British Virgin Islands-registered company has agreed to all conditions by Binh Minh.

Gia Quyen, or Empower Securities Company, concluded a deal to sell 49 per cent to a Korean company, the maximum stake allowed under the law.

The local company will sell more than 12.86 million shares to the Korea Investment Securities Company, doubling its chartered capital to VND270 billion. EPS has to get approval from the State Securities Commission for its issuance.

EPS expects its partner to bring in Korean investors and provide consultancy to Vietnamese companies wishing to list overseas.

Also last week, Hoa Phat Group bought almost a 50 per cent stake held by others in Hoa Phat Energy Joint Stock Company to increase its ownership in the company from 50 per cent to 99.86 per cent.

The company says this would help it improve operations.

As usual, none of the parties in any of the deals were willing to disclose the sums involved.

The developments are in line with the forecast by the auditing and consulting firm PricewaterhouseCoopers of a growth in the number of such deals this year.

Inbound strategic acquisitions and private-equity deals are being fuelled by the global economic recovery and positive sentiment about Viet Nam's ability to continue to grow at strong rates despite the crisis, according to the firm.

Anti-dumping alert

With Vietnamese businesses often getting caught up in anti-dumping troubles, the Ministry of Industry and Trade has decided to set up an early warning system on anti-dumping.

It plans to create an internet-based system early next month to warn about anti-dumping proceedings against Vietnamese goods so that exporters will have time to respond to punitive action by importing countries.

The system will initially cover proceedings in the US and Europe, Viet Nam's two key export markets, before enlarging the coverage to other markets, according to Bach Van Mung, director of the ministry's Department of Competition Management.

The status of exports will be indicated in three different colors in the system.

Green will indicate that the export items are normal while yellow will mean the commodities are in danger of being sued for selling at below-market prices.

Red will indicate that a product group faces the highest risk of anti-dumping proceedings.

Recent anti-dumping proceedings have caused huge damage to Viet Nam in terms of profits and jobs.

The country's industry groupings have proved inadequate in dealing with such proceedings while enterprises were taken by surprise by the lawsuits due to the lack of information.

A lawsuit by the European Bicycle Manufacturers Association led to a decision by the European Union to slap anti-dumping tariffs of up to 34.5 per cent on Vietnamese bicycles in 2005.

Source: vietnamnews

HD Bank to buy shares in manufacturer

HCM CITY — Son Ha International Corporation, listed at HCM Stock Exchange as SHI, signed a contract yesterday to sell new shares to joint-stock HD Bank.

Under the agreement, SHI will sell 1.5 million shares, or six per cent of the company's new chartered capital, at the price of VND14,000 (US$0.73), according to SHI deputy general director Dam Quang Hung.

The sale was part of the company plan to issue 10 million new shares to increase its chartered capital to VND250 billion from the current VND150 billion.

The company will also sell another 1.5 million units to Thang Long Securities Company at the same price of VND14,000.

Of the remaining seven million shares, SHI's existing shareholders will be eligible to acquire three million, or one new share for every three they hold, at VND12,000 each.

Four million shares will be auctioned on June 28 at the initial price of VND16,000, and those who want to buy shares via the auction should register on June 18 at the latest.

The Ha Noi-based SHI plans to develop a new factory in HCM City while enlarging the existing one in the capital city.

The company, with main products of stainless steel water tanks, wash bowls and pipes, targets this year's net profit at VND70 billion, which is expected to rise to VND113 billion in 2011.

Source: vietnamnews

Banks face tighter listing rules

Credit institutions would not be allowed to list shares on the nation's stock exchanges if they did not meet charter capital requirements at the time of applying for the listing, under the latest draft regulation from the State Bank of Viet Nam currently being circulated for public comment.

While most enterprises must simply comply with requirements in the Law Securities Law in order to list shares, commercial banks must also receive approval from the central bank.

Current regulations state that all commercial banks will be required to have at least VND3 trillion (US$158.7 million) in charter capital by the end of 2010. If the proposed regulation is issued, this would also become the threshold requirement for banks to apply for a listing on one of the nation's two stock exchanges.

Some market watchers commented that the circular, if issued, would block a valuable avenue for banks to raise capital. The draft regulation is certainly not good news for smaller banks that have been considering selling shares on the stock exchange as a measure to raise funds in order to meet this year's stricter charter capital requirements.

"Well, we are getting some bad luck!" the deputy director of a HCM City-based bank told Viet Nam News on condition of anonymity. "Listing is considered the best way to raise capital for small banks at this time, but that plan now seems out the window. It's not easy at all because the deadline is now very near."

The central bank has already asked commercial banks and other credit institutions to submit plans no later than June 30 outlining how they expect to meet higher charter capital requirements by the end of this year. Those banks unable to submit plans would be subject to closure or required to merge with another institution. Those institutions would be required to submit plans for closure or merger to the State Bank by September 30.

In addition to the capital requirement for listing shares, the draft circular would also requires applicants to be profitable for two consecutive years prior to applying for a listing, to demonstrate a capital adequacy ratio and to maintain a bad debt ratio of no more than 3 per cent of outstanding loans.

Just six out of nearly 39 commercial banks have listed on the HCM City or Ha Noi stock exchanges. They are Asia Commercial Bank, Sacombank, Sai Gon - Ha Noi Bank, Eximbank, Vietcombank and Vietinbank.

State Bank of Viet Nam Governor Nguyen Van Giau has told reporters in the past that he would not overindulge banks which failed to increase charter capital in accordance with regulations.

Source: vietnamnews

State bank calls for tighter curbs on dollar credit growth

HA NOI – The State Bank of Viet Nam has asked commercial banks to strictly supervise credit growth in foreign currencies, including the US dollars, in order to secure the banking system.

Banks were told to control outstanding loans at lower rates than deposits, which would in turn ensure sufficient payment capacity.

The message was sent when loans in US dollars continued to dominate overall credit growth, rising by 3.16 per cent in May, bringing dollar credit growth in the first five months to 20.23 per cent, according to the SBV.

Meanwhile, dollar deposit growth was just 0.21-0.78 per cent during the first four months, and 1.19 per cent in May.

This was blamed on the high interest rates commercial banks were charging on dong-denominated loans. Along with the enormous savings in interest costs, the stability of the dollar-dong exchange rate had also encouraged enterprises to take out loans in dollars.

The central bank also told bankers to strictly control the dollar loan tenors in order to be balanced with deposit tenors, which were designed to avoid risks in payments.

Commercial banks should also limit granting authority to branches over dollar lendings.

This regulation will minimise risks, in case branches do not comply with the security rules in foreign exchange management.

Lenders must be sure that they can call back loans for dollar loans made for export or import.

Dollar credit should be spared for prioritised imports such as petrol and gas, as well as materials and equipment for production and construction.

Source: vietnamnews

HSBC offers online cash services

HSBC Bank Vietnam yesterday introduced ClientSphere, an online solution delivery platform for global payment and cash management customers.

This global platform provides customers with a solution for the delivery of cash management services.

ClientSphere enables corporate customers to manage project activities and track current status via a secure banking website that is accessible by the project team within the company and HSBC.

HSBC said it was the first bank, not only in Viet Nam but worldwide, to offer this fully integrated solution delivery service which would enable all parties involved in a project to track and control new developments in real time.

Source: VietFinanceNews.com

Dong up a shade, but dollar demand to rise

The dong has risen marginally against the dollar over the past week but it felt no big impact on Monday from China's move over the weekend to make the yuan more flexible, which has lifted other Asian currencies.

The dong edged up to 18,940/18,990 per dollar from 18,950/19,000 a week ago, Vietcombank, Vietnam's largest partly private lender, said in its daily quotations.

Foreign exchange liquidity in Vietnam remained high, with demand and supply well balanced on the domestic market, the central bank said in its weekly report last week.

A dealer at a foreign bank in Ho Chi Minh City, Vietnam's commercial centre, said dollar inflows from exports and foreign direct investment were good.

But bankers said demand for dollars would rise in September or October when loans, which have grown strongly this year and are often given for six to nine months, are due for repayment.

"If exports do not pick up, there may be pressure on the foreign exchange market when importers need to buy dollars for repayment," a dealer at a Vietnamese bank said.

Fixings on overnight dollar loans offered by domestic banks were unchanged from last week at 0.43 percent, but two-month lending rates edged up to 1.37 percent from 1.27 percent last Monday, reflecting a higher dollar demand forecast.

Foreign exchange loans by banks in Ho Chi Minh City, mostly in U.S. dollars, at the end of May surged 41.5 percent from May 2009, compared with growth of 0.1 percent in the same period last year against May 2008, the city's statistics reports showed.

Last Wednesday, the central bank asked banks to report their foreign exchange sales and lending to importers for repayment as part of moves to control Vietnam's trade deficit and avoid putting pressure on the exchange rate.

Banks also need to ensure their outstanding foreign exchange loans were less than their foreign currency deposits raised from companies and residents, and must tightly control the credit line and terms of each loan, the central bank said in a statement.

The first dealer said importers were closely watching exchange rate movements

"Any time the rate moves close to the critical ceiling of VND19,100, they will start buying dollars," he said, adding that the exchange rate now looked reasonable.

The central bank set the daily mid-point for Monday's dollar/dong transactions at 18,544 dong and banks are allowed to trade 3 percent either side of that, between VND17,988 and VND19,100 per dollar.

Source: thanhniennews.com

Banks want more time for interest rate cuts

The central bank last weekend reiterated its call for local lenders to cut interest rates, but the banks have averred that it is a task that would take a long time to complete.

The commercial banks said interest rates can only be lowered step by step, beginning with short term loans and deposits.

They also said government bond yields have to be lowered so that it will be easier for the banks to raise funds after cutting their deposit rates.

The government has asked the central bank to bring lending rates down to around 12 percent and deposit rates to 10 percent.

Duong Thu Huong, general secretary of the Vietnam Bank Association, said commercial banks have followed the request and tried to cut their rates. Most banks now offer loans at 13-14 percent, compared with 15 percent in April.

But Huong said it will be difficult to achieve the interest rate targets set by the government. “Bond yields are so high, so how can banks lower deposit rates?” she asked.

Experts said bond yields are now around 11 percent. If banks have to lower deposit rates to 10 percent, bond yields cannot be higher than 9 percent, they said.

Deposits vs bonds

Ly Xuan Hai, general director of the Asian Commercial Bank, said deposits have slowed down at many banks, so they did not want to lower their rates. Most clients were making just short term deposits, he added.

The research team at Hanoi-based Woori CBV Securities Corporation said on Tuesday that because of the instability of deposit rates, newly issued bonds with high yields are now attractive.

Banks set deposit rates in the range of 11-12 percent a year and “interest rates need a lag time to decrease a significant amount, maybe one or three months,” the researchers said.

Ho Chi Minh City Securities Corporation said in a report last week that many banks were trying to improve their loan-to-deposit ratio and push it below 80 percent before the end of October to meet new central bank guidelines. “The problem, of course, is that this makes it difficult for banks to cut lending rates further,” the company said.

So the State Bank of Vietnam may have to inject liquidity through open market operations to bring rates down again, it said.

Liquidity

Lending has risen 10.5 percent this year, and liquidity in the banking system has increased 9.6 percent, according to a statement released by the State Bank of Vietnam on Tuesday.

“Total liquidity and credit grew at a reasonable level, meeting capital demand in the economy, supporting economic growth and contributing to controlling inflation,” the central bank said. The estimates for total outstanding loans were for the period “until June,” it said, without specifying a date.

Vietnam is targeting growth of 6.5 percent this year, and the government has asked local banks to boost lending and support the economy. Gross domestic product expanded 5.3 percent last year, the slowest pace since 1999.

The local foreign-exchange market “has gradually become stable” with the dong’s rate in the so-called black market gradually becoming closer to the official rate, which has “positively contributed to stabilizing the value of the dong,” the central bank said.

Source: thanhniennews.com

Vietnam banks hold back on real estate development loans

Many banks have shied away from offering real estate loans after the government ordered tighter controls over lending to prevent a property bubble, a news report said Sunday.

The general practice is that when it gets difficult to expand loans in the production sector, commercial banks often switch to real estate loans, a banker was quoted by local news website VietNamNet as saying.

But now lenders have to control their real estate loans and the best way to do so is to focus on homebuyers and restrict lending to developers, he said.

The Asia Commercial Bank has said it has stopped financing real estate projects and only provides loans for home purchases and repairs, but lending conditions have been tightened for these as well.

An official from the Hanoi-based Maritime Bank said the State Bank of Vietnam inspects real estate lending carefully and banks have to report on both the amount of loans and what they will be used for. When credit conditions become strict, it’s not easy to find qualified clients, the official said.

Prime Minister Nguyen Tan Dung early this month had asked commercial banks to tighten control over real estate loans.

Loans for the real estate sector in the first five months reached VND192 trillion (US$10.1 billion), accounting for 10 percent of all lending nationwide, according to the State Bank of Vietnam.

Hoang The Thoa, an expert from the central bank, said this was a time when developers have difficulty accessing bank loans even though interest rates are quite attractive.

He said many developers were having to use down payments from customers to fund their projects.

Source: thanhniennews.com

EU praises Vietnamese compliance to trade rules

Vietnamese enterprises have strictly complied with the regulations set by the European Union for exported goods, therefore the prospect of them getting access to the EU market and being competitive are very positive, said an EU representative.

“The technical standards set by the EU are growing in both quantity and depth, yet the amount of Vietnamese goods exported to the market has continued to increase over the years,” said Hans Farnhammer, the EU delegation to Vietnam’s First Secretary at a trade conference in Hanoi Wednesday.

The conference on trade barriers to Vietnamese business associations and enterprises gathered numerous overseas and domestic experts as well as corporate executives to discuss the opportunities and challenges when carrying out the commitments agreed in free trade agreements.

In 2003, Vietnam exported US$2.3 billion worth of products to the EU and its export turnover rose to $8.6 billion in 2008. Despite the global economic recession in 2009, Vietnam still earned nearly $7.8 billion from its exports to the EU.

During the conference, the participants also discussed how to solve international trade disputes and the role of associations when providing advice on export policies and market development strategies to State agencies and enterprises.

Although Vietnam’s exports are likely to increase in 2010, First Secretary Hans Farnhammer said that the country should be careful of trade barriers, especially anti-dumping and anti-subsidising cases filed by local producers in import markets.

The EU is the second largest importer of Vietnamese goods after the US. Many exports including textiles and garments, footwear, fine arts and seafood’s are facing technical trade barriers in this market.

Since earlier this year, the EU has imposed a 10 percent anti-dumping tax on Vietnamese leather-capped shoes, slashing the country’s footwear exports to the market.

Phan The Rue, the former Deputy Minister of Trade, said that the number of trade disputes relating to Vietnamese exports will increase in the future. Therefore, he emphasised the need for local enterprises to seek legal assistance before starting to send goods to a certain market.

He also called for a market study agency to be set up, which could give an early warning to domestic firms.

Source: tuoitrenews.vn

Ocean Bank acquires 11% of property firm

Ocean Commercial Bank will acquire 11 percent in Gia Dinh Development Investment Corp for VND44 billion (US$2.3 million) and provide banking services to the property firm.

Under an agreement signed last Thursday, the bank will lend as well as syndicate loans, facilitate local and international payments, and sell foreign exchange.

GDI owns Gia Dinh Plaza, Lega Fashion Plaza, and Sagoda in Ho Chi Minh City.

It has also signed a deal with Ocean Securities Co to use its brokerage services.

GDI was established in 2007 by Gia Dinh Textile & Garment Corp, Saigon 3 Garment Joint Stock Co, and Khang Thong Construction Trading Service Joint Stock Co.

Source: tuoitrenews.vn

VIB gets green light to issue shares, hike capital

Vietnam International Commercial Bank has got the go-ahead from the State Bank of Vietnam to issue 100 million shares this year to raise its chartered capital to VND4 trillion (US$211.2 million).

The issuance will be done in two stages to raise VND1 trillion, with 40 million shares issued to existing shareholders in the first and 60 million shares to international strategic partners in the second.

The bank has also received approval from the SBV to sell a 15 percent stake to the Commonwealth Bank of Australia (CBA). The two sides agreed upon the transaction in April.

The CBA is the largest lender in Australia with assets of $785 billion. It has had a presence in the Vietnamese market for 16 years, opening a representative office in Ho Chi Minh City in 2008.

The two banks began cooperation last year under which the CBA has assisted the local lender with retail banking, technologies, risk management, and capital and human resource management.

After the acquisition, the Australian bank is set to transfer technologies and augment VIB’s capacity.

The central bank has given all banks until the end of this year to raise their capital to at least VND3 trillion ($158.2 million), depending on their total risk-weighted assets. The international norm is 8 percent of the assets but the SBV has fixed it at 9 percent.

Source: tuoitrenews.vn

Ministry gets tougher on software copyrights

In an effort to reduce software copyright violations, the Ministry of Information and Communications has required relevant agencies and departments to report on the use of licensed and open-source software.

Agencies have been ordered to compile data on the total number of computers in use in the country and the numbers using licensed or open-source software, as well as estimate future demand for software.

Vietnam signed a software licensing agreement with Microsoft in 2007 in an effort to reduce the number of copyright software violations. In 2008, the ministry also placed a priority on encouraging the use of open-source software in State agencies.

Vu Xuan Thanh, chief inspector of the Ministry of Culture, Sports and Tourism, has also been on a mission to unearth software copyright violations and said that respect for software copyrights among major enterprises last year had shown obvious improvement.

Out of 27 software audits, a few companies were found without any illegally installed software and some others had very little pirated software.

Piracy was most prevalent in small- and medium-sized firms, and Thanh called for tougher enforcement as well as efforts to educate and raise the awareness of users.

In early June, auditors uncovered hundreds of pirated programmes installed on the computers of two companies in HCMC and Binh Duong Province , VIMEDIMEX Pharmaceuticals and Tran Duc Joint Stock Co.

Representatives from both companies acknowledged that the unlicensed installations were infringing and a violation of the Law on Intellectual Property.

The firms were ordered to uninstall all unlicensed software and contact the respective software owners to negotiate lawful licences for use.

The rate of software copyright violations in Viet Nam decreased last year, and 2009 was also the first year in which the country fell off the global list of the top ten countries with the most software copyright violations.

Source: tuoitrenews.vn