Traditional capital rising from banks has recently diverted into stock market which is currently not very stable.
State Securities Commission (SSC) of Vietnam announced that fund raising through stock market has declined by 50% than 2010 and 70% than 2009. The issuance of State bonds in the beginning of March faced consecutive failures due to increase bank interest rates. Declining and unstable share indexes drew up a window of difficulties in 2011, causing enterprises to cancel or delay issuance of shares to increase their capital. However, experts claim that in the time of inactive market, issuance of shares still attracts investors but enterprises should catch the chance of market recovery. Thus, enterprises should back up plans to increase their capital in regular meeting of shareholders.
Experts also predict possible decline of bank interest rates of Viet Nam dongs in the upcoming third quarter (or the beginning of June) thanks to the control of US dollars fluctuation and dollarization as well as black markets of foreign exchanges. This will also be bringing up chance to improve credit loans. Banks by then will be forced to reduce interest rates in the face of great benefits in a fiscal year. The moves have been preliminarily made by banks which announced plans to inject credit loans to production field.
Representative of VietinBank said that the bank would make VND 20,000 billion of loans to production field and auxiliary fields of mechanical engineer, textile, and shoes. Accordingly, enterprises expand their business and production or investment into auxiliary products. Besides, joint stock banks are seeking for long-term cheap price capital from foreign financial institutions to sustain its supply for the market. Sacombank has made such a move by signing up with entrepreneurial development bank of the Netherlands (FMO) to make a loan of USD 150 million in 10 years to support small and medium enterprises. Besides, banks also offer favorable products for clients in specific fields.
Meanwhile, enterprises find other sources from foreign partnership and from more issuance of bonds and shares in the face of troubling credit channel of banks. Despite prospective of capital increases; enterprises are not very promising in terms of capital mobilization through stock market.
Mrs. Duong Thu Huong, who is General Secretary of Federation of Vietnamese banks, asserts that the efforts should be made not only by banks but also by enterprises to balance the interest rates. Growth of credit loans is not determined by banks which should not offer loans at all cost but only good clients and projects can promote such growth.
Reported by Nguyen Hong Phuc – Translated by Vi Bao
