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Stock market players seek bank loans to boost odds   2009-06-09 - VNStockNews

The stock market has recovered to a fair extent over the last two months creating solid sentiment from investors who besides using their own cash reserves are also now knocking on bank doors wanting securities loans to maximise profit.


Being aware of increasing high demand of investors, almost all securities companies have cooperated with banks to support capital to their clients. Also, unlike last year when securities credit was tightened, banks are open to securities-back loans, particularly when the stock market is presenting positive movements.

Danang Securities Co (DNSC) has cooperated with Bank for Agriculture and Rural Development of Vietnam (Agribank)-District 10 branch, HCM City and Bank for Development and Investment of Vietnam (Bidv) to offer securities-backed loans, advance payment for share sales with high limit. The maximum lending limit for each individual at DNSC is 6.5 billion dong and for each organisation 20 billion dong with the maximum term of three months or less. Au Viet Securities Co (AVSC) has also jointly worked with the two above banks to offer securities-backed lending services. The lending limit is up to 40 percent of share market prices with an interest rate of 0.875 percent a month or 10-10.5 percent a year.

Investors that open accounts at AVSC can borrow 50 million dong a contract at maximum. However, a client can enter many credit contracts with total outstanding loans of up to three billion dong for individuals and as much as five billion dong for legal entities with lending terms of six months. BETA Securities Co (BSI) has cooperated with Southern Asia Bank and Lien Viet Bank to launch securities-back lending services.

According to a representative from BSI, demand for capital of investors has sharply grown over the last two months when the stock market sees strong increase of VN Index. However, demand for capital of investors are often of short terms, hence, contracts come due early. The recovery of the stock market is a good opportunity for investors. However, because available cash is limited, securities companies said that demand for capital of clients are on an increase.

Banks also said that capital for investors is unlimited if they meet all required conditions. As regulated, banks are allowed to lend up to 20 percent of their chartered capital into securities. Nevertheless, last year, the stock market sharply declined and continued being gloomy in the first two months, banks restricted securities-backed lending activities. Furthermore, investors were also indifferent to borrowing capital from banks to trade securities because of overly high interest rates.

In recent months, the stock market has presented some recovery signs, hence, banks have taken advantages to promote such kind of services. The general director of Asia Commercial Bank (ACB) Ly Xuan Hai said that by mid-May, total securities-backed loans at the bank reached 800 billion dong. Hai added that ACB continued promoting securities-backed lending activities because this is a kind of potential credit.

According to some senior officials of Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), through its securities subsidiary, Sacombank Securities Co (SBS), the bank continued leveraging securities lending activities. However, in short term, the bank's list of securities used as collaterals will focus on listed codes in the official floor.

As for shares being traded on the informal share market, some securities companies and banks only select codes with high liquidity, particularly Eximbank, MB, VCB, DongA Bank shares and others.

Dam The Thai, manager in charge of individual client division of An Binh Bank also said that as for securities-backed lending activities, the bank is always open to investors. Nevertheless, in short terms, credit requirements are still strictly managed, hence, the maximum lending limit for investors is 500 million dong a client and applied for listed shares. The securities-backed lending interest rate at ABBank is very competitive, only 10.5 percent a year.

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