Hanoi - Vietnam's state banking regulator has ordered
lending institutions to limit loans to stock-market investors, hoping
to rein in speculation in the country's infant securities-trading
system, state media reported Friday.
The State Bank of Vietnam ordered commercial banks that have
stock-market loans surpassing 3 per cent of their total assets to
stop lending to stock investors, according to Tuoi Tre newspaper.
Nguyen Danh Trong, deputy director of the SBV's Monetary Policy
Department, told Tuoi Tre the new lending limits were necessary to
avoid fueling rampant speculation in Vietnam's official and
unofficial equity trading.
'No encouragement should be given to lending for stocks
investment, even in cases where there is collateral,' Trong said.
Vietnam's official Ho Chi Minh City Securities Trading Centre has
seen a wild ride in the past 18 months. The VNIndex measuring all
stocks was up 144 per cent last year, and has fluctuated sharply
during 2007.
The far larger - and unregulated - 'over-the-counter' market has
reportedly seen even wilder gains, with some investors reporting
doubling their money in just a few months.
Analysts have warned that Vietnam's newfound stocks craze - the
stock market is only seven years old and until last year, most
Vietnamese shunned the securities in favour of gold and real estate
- may be irrational exuberance and making loans to buy more stocks
only encourages it.
A recent survey by the SBV found that the level of loans to stock
investors in all banks is now at 2.5 per cent of the total
outstanding loans.
However, an official from SBV's monetary policy department
revealed that small-scale banks have made up to 45 per cent of their
total loans for stock investments, an unheard-of level.
At least 12 larger, private 'joint-stock' banks have lent an
average over 7 per cent of loans to securities investors, the
newspaper said. Total dollar figures of stock-investment loans were
not available.
Some banks said they weren't worried about the risks of making
loans to invest in the stock market. Several joint-venture banks have
been rushing to cater the demand for this market because of high
lending rate of returns.
'High profits always go along with high risks,' Tuoi Tre quoted.
Nguyen Van Thanh, Incombank's deputy general director as saying.
Another bank representative told the paper that 'Banks are doing
well and have no concern so far. They don't even worry even if the
loan accounts for 10 or even 15 per cent of their outstanding loans.'
© 2007 dpa - Deutsche Presse-Agentur 
USA
Your Talkback on this Story