Banks rush to seek foreign capital

LienViet Post Bank on August 28 signed a contract with JP Morgan Chase Bank NA Singapore, which will provide a $50 million loan to the former for three years.

LienViet Post Bank’s CEO said the loan helps LienViet Post Bank integrate more deeply into the international finance market.

Prior to that, the bank got a 3-year syndicated loan worth $50 million from eight Taiwanese banks headed by Cathay United Bank.

On September 6, Russia’s IIB committed to provide Vietnam’s SHB a loan worth $20 million for five years. 

SHB on the same day signed a cooperation agreement with Russia’s IBEC under which IBEC will provide loans to SHB with the initial limit of 20 million Euro to serve international payments and implement import/export transactions among IBEC’s member countries, forex and guarantee activities.

More recently, on September 10, IFC, an arm of the World Bank, announced it would provide a $100 million 3-year loan to Vietnam’s Orient Bank (OCB). 

This includes $57.16 million from IFC and $42.84 million from Managed Co-Lending Portfolio Program – MCPP.

Earlier this year, IFC also provided a $100 million loan to TP Bank after spending VND405 billion to acquire 5 percent of the bank’s shares in 2016.

Many lending deals were reported in 2017, including the VP Bank’s borrowing of $100 million from Deutsche Bank, $122 million from IFC and $41 million from Credit Suisse.

Also in the year, AB Bank received $150 million from IFC, and VIB Bank got a syndicated loan of $185 million from IFC and three foreign banks.

Even VietinBank, a state-owned bank, has also borrowed capital from a series of foreign banks. In June 2017, it signed a contract on borrowing $100 million from eight finance institutions. One year before that, it borrowed $200 million from 18 foreign banks.

Analysts said Vietnam’s banks borrow money from foreign banks to improve their medium- and long-term capital. 

From early 2019, the proportion of short-term capital the banks can use for long-term lending will be cut from 45 percent to 40 percent. 

The demand for medium- and long-term capital is especially high from banks which focus on retail banking such as LienViet Post Bank, which has retail banking accounting for 50 percent of its total outstanding loans.

Analysts also believe that banks are borrowing money to satisfy requirements on capital adequacy and payment capability in foreign currencies. 

They cannot expect capital in foreign currency from the public’s deposits, because the current interest rate of zero percent cannot attract depositors.

RELATED NEWS

Foreign investors continue to be net sellers in stock market

Where is foreign capital going?