Viet­nam to ex­tend dead­line for banks to raise cap­i­tal

The Pak Banker - - Front Page -

HANOI: Viet­nam will ex­tend the dead­line for banks to raise reg­is­tered cap­i­tal by one year to ease pres­sure on banks hav­ing dif­fi­culty meet­ing higher re­quire­ments.

Prime Min­is­ter Nguyen Tan Dung has ap­proved the pro­posal re­quir­ing lo­cal len­ders to raise reg­is­tered cap­i­tal lev­els to 3 tril­lion dong ($153.9 mil­lion), by Dec. 31, 2011, the State Bank of Viet­nam said on its web site to­day. Some of the nation's banks have had dif­fi­culty rais­ing cap­i­tal amid a 20 per­cent de­cline in the coun­try's bench­mark stock in­dex since the cen­tral bank's man­date was is­sued four years ago. A re­duc­tion in state-owned com­pa­nies' stakes in banks has also hurt len­ders' abil­ity to raise cap­i­tal, Duong Quoc Anh, chief in­spec­tor of the cen­tral bank, said in the state­ment.

"Nu­mer­ous len­ders were try­ing to raise cap­i­tal at the same time, mak­ing bank stocks no longer at­trac­tive to both for­eign and do­mes­tic in­vestors," Anh said.

The govern­ment is­sued a de­cree on Nov. 22, 2006, re­quir­ing banks to raise their reg­is­tered cap­i­tal to 3 tril­lion dong by Dec. 31, 2010. To­day's dead­line ex­ten­sion spurred spec­u­la­tion that the move may help bring in­ter­est rates down and boost the coun­try's stock mar­ket.

"Be­cause banks no longer have the pres­sure to scale up, they won't have to in­crease in­ter­est rates to at­tract de­posits. Con­se­quently, in­ter­est rates will fall," said Tong Minh Tuan, deputy head of re­search at Hanoi-based BIDV Se­cu­ri­ties Co. "Lower rates will bring down bor­row­ing costs for com­pa­nies, boost­ing their stocks and bol­ster­ing money flow into the mar­ket."

The VN In­dex dropped 0.1 per­cent to 489.65 to­day at the 11 a.m. close of the Ho Chi Minh City Stock Ex­change, af­ter jump­ing 3.6 per­cent yes­ter­day, the biggest ad­vance since Jan. 4. -PB News

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