Vietnam tightens loan regulations to securities companies

Viet Nam bans credit organisations to lend the money to affiliate securities companies for trading in securities.
The ban was clearly stated in a decision dated Jan. 20 signed by Governor of the State Bank of Viet Nam, Le Duc Thuy.

Credit organisations are permitted to lend the money to non-affiliate securities companies on condition these companies have property to guarantee their loans.
Loans or financial guarantees to securities companies whose capital is contributed and managed by banks, will not exceed 10% of their capital, the decision said.
Meanwhile, loans and guarantees to other securities companies must be below 20% of their capital.

"Setting this limitation is necessary," Governor Thuy said, adding the move is aimed at preventing the danger of collapse and inability to secure payments by banks as the securities market is overheating.
According to Thuy, many investors have used up to more than 50% of their loans to purchase shares on the securities market, which posted an average growth rate of 30% within a month.
Together with the State Bank of Viet Nam's decision, the State Securities Commission said it will employ a score of measures to ensure sustainable and healthy growth for the securities market.

The commission will regularly send inspectors to securities companies to track down signals of spied transactions and encourage them to publish their 2006 financial reports.
The commission will also increase its monitoring of the listing of information by listed companies on the market as well as the transaction of listed shares.

Source: VNA