Lien Viet Post Bank, for example, plans to issue VND4 trillion worth of bonds this year, while VND2 trillion worth of valuable papers were issued in 2015. 

The National Citizen Bank (NCB) has approved the plan to issue VND1 trillion worth of bonds this year, higher than last year’s VND200 billion.

Nhip Cau Dau Tu has found that the total value of valuable papers that 14 commercial banks issued in 2015 increased by VND85 trillion, or 2.4 times higher than the year before. 

BIDV and VietinBank, the two state invested banks, proved to be the largest issuers with the volume of issued bonds increasing by three and four times, respectively.

As for joint stock banks, VP Bank is the largest issuer with the issued volume equal to VietinBank’s.  VP Bank, which has the ‘habit’ of issuing bonds, would see the issuance scale increasing by 76 percent this year. Meanwhile, HD Bank and SHB plan the two-fold increase in 2016.

Commercial banks are not only bond issuers, but they are bond buyers as well. VietinBank, for example, had the issued valuable paper value increase by four times in 2015 and saw the purchased volume of valuable papers from other credit institutions increase by two times.

In fact, valuable papers only account for a small proportion in banks’ total mobilized capital, but they are also important loans. 

A question has been raised why banks have to seek capital through bond issuance while they still can mobilize capital through bank deposits.

An analyst said that banks issue bonds mostly to have more tier-2 capital, which would indirectly help improve the CAR (capital adequacy ratio). 

Some commercial banks, especially banks applying Basel II Accord next year, bear pressure as they have to follow Circular No 09 which has replaced Circular 36.

BIDV, for example, has been recently trying to improve CAR index. It even decided to retain profits and refused to pay dividends so as to be able to raise capital.

Also according to the analyst, as bank shares are no longer ‘hot’, it is now more difficult for banks to call for capital through the stock market. 

In this case, banks decided to mobilize capital through bond issuance, because the method allowed them to raise capital easily, while there was no need to fear for the ‘share dilution effect’.

Vietcombank, one of the largest commercial banks, has also decided to issue bonds to raise capital, though a detailed plan has not been revealed.

NCDT