December 31, 2007 is the deadline for commercial banks to have reduced securities loans to below 3%; however, most institutions have met the central bank’s instruction before the deadline.

SeABank was the first to announce it had successfully completed the task, 2.78% of total outstanding loans. Maritime Bank said its securities loans now account for only 2.19%, which will be further reduced to 1.17% by December 31, 2007.

Lam Huu Hanh, Deputy Director General of OCB, said that its total securities loans will be worth only VND150bil ($9.37mil) by December 31, or 2.5% (total outstanding estimated at VND7.5tril).

Tran Phuong Binh, General Director of EAB, said that the bank does not dare accept any more securities loans, though they now just amount to 1.8% of its total outstanding loans. EAB is seeking permission to open new branches in several big cities and the central bank may turn down their request if EAB does not fulfill the central bank’s instruction.

Eximbank said that it has always kept securities loans to below 2% of the total.

Sacombank, GiaDinh Bank and VIB Bank have all promised they would meet expectations. However, Nguyen Dinh Tung, Deputy General Director of VIB Bank said they will provide an explanation to the State Bank if it does not manage to lower securities loans to the required level.

Banks are cautious about discussing 2008 securities loans plans. Most hope the central bank raise the cap to 5%.

Tran Thi Viet Thu, General Director of GiaDinh Bank, said his institution will continue providing loans to fund securities investments, but the maximum value of the loans will be equal to 20-30% of the shares’ market values.

While domestic banks are eager to loan money to securities investors, foreign bank branches in Vietnam are not.

The UK-based Standard Chartered Bank, which has opened its second branch in HCM City and is moving ahead with its plan to set up a 100% foreign owned bank in Vietnam, is trying to provide retail banking services but will not fund securities investments.

According to the bank, Vietnam’s stock market is in its infancy and there are yet unseen high risks.

Other foreign bank branches in Vietnam, including HSBC and ANZ are providing consumer credit, but securities loaning is not listed in their business plan.

Source: DTCK, TBKTVN