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Banks face tighter listing rules   2010-06-16 - Viet Nam News

Credit institutions would not be allowed to list shares on the nation’s stock exchanges if they did not meet charter capital requirements at the time of applying for the listing, under the latest draft regulation from the State Bank of Viet Nam currently being circulated for public comment.

While most enterprises must simply comply with requirements in the Law Securities Law in order to list shares, commercial banks must also receive approval from the central bank.

Current regulations state that all commercial banks will be required to have at least VND3 trillion (US$158.7 million) in charter capital by the end of 2010. If the proposed regulation is issued, this would also become the threshold requirement for banks to apply for a listing on one of the nation’s two stock exchanges.

Some market watchers commented that the circular, if issued, would block a valuable avenue for banks to raise capital. The draft regulation is certainly not good news for smaller banks that have been considering selling shares on the stock exchange as a measure to raise funds in order to meet this year’s stricter charter capital requirements.

"Well, we are getting some bad luck!" the deputy director of a HCM City-based bank told Viet Nam News on condition of anonymity. "Listing is considered the best way to raise capital for small banks at this time, but that plan now seems out the window. It’s not easy at all because the deadline is now very near."

The central bank has already asked commercial banks and other credit institutions to submit plans no later than June 30 outlining how they expect to meet higher charter capital requirements by the end of this year. Those banks unable to submit plans would be subject to closure or required to merge with another institution. Those institutions would be required to submit plans for closure or merger to the State Bank by September 30.

In addition to the capital requirement for listing shares, the draft circular would also requires applicants to be profitable for two consecutive years prior to applying for a listing, to demonstrate a capital adequacy ratio and to maintain a bad debt ratio of no more than 3 per cent of outstanding loans.

Just six out of nearly 39 commercial banks have listed on the HCM City or Ha Noi stock exchanges. They are Asia Commercial Bank, Sacombank, Sai Gon - Ha Noi Bank, Eximbank, Vietcombank and Vietinbank.

State Bank of Viet Nam Governor Nguyen Van Giau has told reporters in the past that he would not overindulge banks which failed to increase charter capital in accordance with regulations.

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