The State Bank of Vietnam's headquarters in Hanoi (Photo: VNA)Hanoi (VNS/VNA) - The State Bank of Vietnam (SBV) has instructedlocal banks to better control risks in corporate bond investment, especiallybonds of real estate firms.
According to the SBV, afterreviewing the business performance of banks in the first half of this year, itsaw the corporate bond investment of some banks facing risks as the ratio ofsuch investment was high and is continuing to rise.
Notably, the amount of bondinvestment in construction and real estate firms at some banks accounted for alarge proportion of the banks’ total assets while the real estate market hasnot yet recovered firmly and the business performance of realty firms stillfaces many difficulties.
In addition, some banks alsoinvested in bonds with other purposes, such as to restructure debts of issuers,which have high risks.
In order to ensure the safety ofthe banking system and limit risks in corporate bond investment, under thedirection, SBV required banks to review their internal regulations related tothe appraisal and approval procedures of corporate bond investment so as toensure they are in accordance with the Government’s current laws.
The SBV also directed commercialbanks not to buy corporate bonds, which have the purpose to restructure thedebts of issuing companies, in accordance with the country’s legal regulations.
According to the State SecuritiesCommission, total corporate bond issuance in the first six months of 2019reached 60 trillion VND (2.58 billion USD).
In June and July, there were 44bond issuers, including 17 realty companies, eight banks and twosecurities companies. The remaining 17 companies that issued bonds were fromdifferent sectors.
Deputy Prime Minister Vuong DinhHue has also recently asked for stricter supervision on corporate bond issuanceso that the finance and equity sectors operate properly and safely.
Accordingly, Hue requested theMinistry of Finance, the State Securities Commission and the SBV to supervisethe corporate bond market carefully and create a development plan for thecorporate bond market, which must consist of lending limits, conditions andratings.-VNS/VNA
According to the SBV, afterreviewing the business performance of banks in the first half of this year, itsaw the corporate bond investment of some banks facing risks as the ratio ofsuch investment was high and is continuing to rise.
Notably, the amount of bondinvestment in construction and real estate firms at some banks accounted for alarge proportion of the banks’ total assets while the real estate market hasnot yet recovered firmly and the business performance of realty firms stillfaces many difficulties.
In addition, some banks alsoinvested in bonds with other purposes, such as to restructure debts of issuers,which have high risks.
In order to ensure the safety ofthe banking system and limit risks in corporate bond investment, under thedirection, SBV required banks to review their internal regulations related tothe appraisal and approval procedures of corporate bond investment so as toensure they are in accordance with the Government’s current laws.
The SBV also directed commercialbanks not to buy corporate bonds, which have the purpose to restructure thedebts of issuing companies, in accordance with the country’s legal regulations.
According to the State SecuritiesCommission, total corporate bond issuance in the first six months of 2019reached 60 trillion VND (2.58 billion USD).
In June and July, there were 44bond issuers, including 17 realty companies, eight banks and twosecurities companies. The remaining 17 companies that issued bonds were fromdifferent sectors.
Deputy Prime Minister Vuong DinhHue has also recently asked for stricter supervision on corporate bond issuanceso that the finance and equity sectors operate properly and safely.
Accordingly, Hue requested theMinistry of Finance, the State Securities Commission and the SBV to supervisethe corporate bond market carefully and create a development plan for thecorporate bond market, which must consist of lending limits, conditions andratings.-VNS/VNA
VNA
