VietNamNet Bridge – The watchdog agency is considering compelling commercial banks to list their shares on the bourse in order to improve the transparency and better control the banks’ ownership ratios.

VnExpress has quoted its source from the State Securities Commission (SSC) as saying “that the State Bank of Vietnam is moving ahead with the plan to force commercial banks to list their shares on the bourse.” The idea was mentioned at a market members’ conference in late November.

A senior official of the State Bank has confirmed that the idea was put forward a long time ago, though it has not issued any legal documents, requesting or encouraging banks to list shares.

However, some experts believe that the central bank would go more quickly with the plan in the time to come, after it found the problems in the banks’ transparency and the ownership ratios.

Once banks list their shares on the bourse, they would have to follow the strict requirements on the information exposition, thus helping improve the transparency of the banking sector.

There have been zigzag ownership relations in the banking sector, called the “cross-ownership.” Banks may contribute capital to their subsidiaries, associated companies or to other commercial banks, which creates very complicated and tortuous relations. The existence of the “cross-ownership” is believed to seriously harm the banking sector and the whole national economy.  

A report showed that there are 40 public banks in Vietnam, 8 of which have been listing shares either at the Hanoi or HCM City Stock Exchanges. The eight include Vietcombank, Vietinbank, Military Bank, Sacombank, Eximbank, ACB, SHB and Navibank.

However, Navibank asked for the shareholders’ approval for delisting at a shareholders’ meeting in October.

A banker said he does not think the State Bank would not succeed in its plan to force banks to list shares right now. The stock market remains very gloomy, which means that now is not the right time for banks to enter the bourse.

A report showed that the share prices of the 8 listing banks have increased by 2 percent in the last 11 months, a very modest growth rate if compared with the average increase of the VN Index at 20 percent and HN Index at 12 percent. Bank shares have become less attractive in the eyes of investors since the day the banks’ high bad debt ratios were made public.

Pham Huu Phu, President of Sacombank, which now lists its shares at the HCM City Stock Exchange (HOSE), commented that bank share attractive remains modest, while he does not think the situation would be improved in 2014.

Listing shares on the bourse was the topic of discussions at shareholders’ meetings some years ago. However, this has become no longer a “hot topic” these days.

The shareholders’ of Techcombank and Maritime Bank mentioned the listing plan at the 2013 shareholders’ meeting and they were told by the board of directors that now is not the right time now to do this.

Dong A Bank planned the share listing many years ago. However, the board of directors admitted recently that the plan still cannot be implemented. In 2012, the bank’s CEO explained that the bank still needed to seek foreign partners. Meanwhile, at the 2013 shareholders’ meeting, he explained that the bank’s plan to increase the chartered capital to VND6 trillion still has not been completed.

Mai Thanh