Cbank groups 4 credit growth caps for 2012

The credit growth ceilings for 4 groups of banks in 2012 will range from 0 percent to 17 percent, according to a central bank’s recent allocation of credit growth targets for this year.

The maximum credit growth rates of 17 percent, 15 percent, and 8 percent will be applied for 3 groups of banks, while those in the last group are not allowed to lend more in 2012, said the State Bank of Vietnam (SBV).

The caps for the 4 groups of banks will be reviewed after 6 months for any changes following the situation.

All the banks categorized under the 4 groups must set up detailed plans for their own target rates including forex fluctuation so that the central bank can monitor the whole banking system more closely, said the central bank.

The target rates will include credit growth in lending, buying corporate bonds (excluding bonds issued by financial institutions) on both the primary and secondary markets, and entrusted capital sources from non-bank financial institutions.

Lenders will also have to restrict lending to sectors that are not recommended to at most, 16 percent of their total lending this year.

For those violating the rule, SBV will double the compulsory reserve ratio in Vietnam dong and limit their expansions.

The central bank did not name the banks in each group.

This is the first time there have been a number of target rates, after experts said that would be more suitable due to the differing financial strength of individual banks.

In the past, the banking sector often shared one target.

Loans of the entire banking sector rose 10.9 percent last year.

The depositing rates at some banks have cooled by 1 percent over the pre-Tet (Lunar New Year) period, to 17 percent.

Many other lenders, however, are still applying rates above the 14 percent cap called for by the SBV using additional payments and bonuses, even in the form of lucky draw or scratch cards, which are not officially recorded in the deposit books.

Vietinbank’s international bond issuing approved

The state-run Vietnam Bank for Industry and Trade, better known as Vietinbank, has been approved by the Prime Minister to issue $500 million in international bonds.

The bank will be responsible for punctual debt repayment, said the Government Office.
The bank planned for its $500 million international bonds with 5-year and 10-year terms in November last year.

The Hong Kong-Shanghai Banking Corp and Barclays were then chosen to offer the consulting services for the issuing.

The issuing is expected to be the first successful business of a Vietnamese bank ever, said Le Duc Tho, Vietinbank deputy general director.

Moody's Investors Service, Standard & Poor's, and Fitch Ratings in late 2010, downgraded Vietnam's credit ratings, in large part because of the problems at the debt-stricken state-owned shipbuilder Vinashin.

The entire $750 million proceeds of the country's first-ever sovereign bond were channeled to Vinashin in 2005.

As a result, state-run oil and gas group PetroVietnam and state utility Vietnam Electricity Group had to delay their plans to sell offshore bonds worth US$1 billion each.