Vietnam chops regulation for securities lending
11 April 2012 Hanoi
Image: Shutterstock
A draft containing possible regulation changes could give the Vietnam securities lending market a sizeable boost if it were to be passed.
The draft circular has the potential to eliminate a number of regulations related to securities lending. Current limitations that could be lifted include a ban on loans by banks to affiliated or subsidiary brokerages, a ban on unsecured loans for securities investment, and a requirement that total outstanding loans and discounts of valuable papers for securities investment not exceed 20 per cent of the bank's charter capital.
ACB Securities Co analyst Nguyen Thi Lan Huong stated that whilst this was ostensibly a good sign for the market, increasing bad debt continued to be a point of contention for banks, and the revised draft will probably show: “limited effectiveness.”
A higher loan-to-deposit ratio was also expected to slow any increase in lending.
The draft circular has the potential to eliminate a number of regulations related to securities lending. Current limitations that could be lifted include a ban on loans by banks to affiliated or subsidiary brokerages, a ban on unsecured loans for securities investment, and a requirement that total outstanding loans and discounts of valuable papers for securities investment not exceed 20 per cent of the bank's charter capital.
ACB Securities Co analyst Nguyen Thi Lan Huong stated that whilst this was ostensibly a good sign for the market, increasing bad debt continued to be a point of contention for banks, and the revised draft will probably show: “limited effectiveness.”
A higher loan-to-deposit ratio was also expected to slow any increase in lending.
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