VietNamNet Bridge – A lot of securities companies have been on the verge of bankruptcy, and their deaths may be a big threat to the whole system. Meanwhile, the process of restructuring the companies has been going very slowly.

Some months ago, the State Securities Commission (SSC) stated that Vietnam needs to experience a securities company reshuffle, which is an important part of the plan on the stock market restructuring. The watchdog agency emphasized that this is an urgent task.

However, the restructuring has been going much slowly than expected, because securities companies still try to hide their problems, while competent agencies do not have effective measures to discover these.

In late August 2012, SSC Chair released a decision to put Sacombank Securities (SBS) under the special control from August 29, 2012, to February 28, 2013.

Prior to that, the information about the bad business performance of the company had been spread out. The total accounts payable have reached 1736 billion dong, the stockholder equity has dropped to minus 256 billion dong and the accumulative loss by June 30, 2012, had climbed to 1772 billion dong.

The deadline for securities companies to submit the reports on their usable capital - a very important moment in the stock market restructuring process, is over. And the thing that worries investors is that after the deadline, the list of securities companies put under the “close watch” remains unchanged.

SBS is a rare case added into the list of the companies subject to the special control. Meanwhile, the names of other seven securities companies were exposed a long time ago. These included the Hanoi Securities Company, Vietnam Rubber Securities Company, Mekong Securities, Da Nang Securities, Truong Son Securities, Vietnam Industry and Commerce securities and Vina Securities.

Most recently, the Mekong Securities Company has escaped from the special control status thanks to the improvement in the usable capital. As such, the number of securities companies put under the special control remains unchanged, at 7 – a very controversial figure if considering the current situation of the Vietnam’s stock market.

Legal documents still under compilation, amendment

Some officials from the watchdog agencies have stated that the number of securities companies needs to be cut by 30 percent, 50 percent, or even 70-90 percent from the current 105.

However, this proves to be not an easy task.

At present, the only legal foundation for supervising the “health” of securities companies is the Ministry of Finance’s Circular No. 226 taking effects since April 1, 2012. The circular stipulates that securities companies must make public the usable capital ratio right in the first half finance reports.

Meanwhile, the majority of securities companies, including the ones which were put under the watchdog agency’s special control before, have shown their usable capital ratios within the “safety line.”

Only the Vietnam Rubber Securities Company reported its bad financial situation with the usable capital dropped to minus 18 percent.

As such, the warnings by the experts given before the Circular No. 226 took effect have come true. Securities companies prove to be dishonest when reporting about their financial conditions, while trying to hide their problems. Some securities companies even deliberately “forgot” to submit reports, accepting to pay the fine of 100 million dong, in order to continue existing on the stock market.

The watchdog agency has said it is considering giving more power to SSC in considering and making decision to put securities companies under the special control. Especially, it would have the right to stop the trade of securities companies if it can see the things possibly affect the safety of investors’ assets.

Manh Ha