Thread: Latest news on the Dong!

I believe what we are seeing here, with this great article, is some final preperation. The Dong appreciation could be announced this next weekend or any of the remaining June weekends. Look for the IQD three to six months down the road.

Hunger for Vietnam bonds de****e market worries
Vietnam, often touted as Asia's next economic tiger, is tapping banks for ideas on a global bond offering for launch later this year, banking sources say.

The rarity value of sovereign debt from this up-and-coming emerging market means the offering will be snapped up, even though world markets are jittery that global interest rates are on the rise.
Vietnam's last sovereign dollar bond in 2005 attracted hefty demand and the bond has performed well in the secondary market, boosting the prospects of the upcoming offer, analysts say.
"It should do quite well," Joseph Lau, an economist at Credit Suisse, said. "Last time around there was a huge amount of interest, but the success of the deal would also be dependent on the external conditions," he said.
Added to which, Vietnam is flexible about its plans.
"They are pretty open about their options. They are looking for Q3 or Q4 this year," said a banker, whose bank has been consulted by the Southeast Asian state. "The mandate could happen at the end of summer."
Asia's sovereign bond underwriting market is dominated by Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan and UBS .
Vietnam raised $750 million in its maiden international bond issue in October 2005 through Credit Suisse.
The 2016 bond offer had initially offered $500 million in debt but it was expanded after generating an order book of $4.5 billion.
The January 2016 bond was sold to yield 7.125 percent, and is currently trading to yield around 6.2 percent.
Benchmark size
Bankers expect the new deal to be between $500 million and $1 billion with a maturity of at least 10 years. Some say it could be a 30-year offering if demand for the paper is strong.
"It has scarcity value. Even in this market it will get sold," said Dilip Shahani, Asia Pacific research head at HSBC.
"I still believe the economy can grow at 7-8 percent. It needs infrastructure, they have a huge population and that's just the domestic side of the story."
He said the export sector could benefit from investors who look to diversify away from a reliance on neighboring China.
Gradual economic reform, strong growth and its entry into the World Trade Organization has entrenched the country in investors' minds.
Foreign direct investment commitments rose to a record $10 billion in 2006, a significant amount considering Vietnam's gross domestic product of around $60 billion and per capita income at just $720 a year.
The Vietnam government plans to re-lend the proceeds of the bond offering to state-owned enterprises, such as in energy and shipping, who will eventually become borrowers themselves in the international markets.
"The medium-to-long-term strategy seems to be to eventually allow major state enterprises to sell their own bonds," said Credit Suisse's Lau.
Source: Reuters

Central bank sets strict rules for new banks
The State Bank of Vietnam (SBV) is set to slap stringent new conditions on the establishment of commercial joint stock banks following a decision issued on June 7.

Under the Decision No24/2007/QD-NHNN, new banks must have at least VND1 trillion (US$62.5 million) in chartered capital and be able to scale up the figure to VND3 trillion by early 2009.

In addition to a 100-founder proviso, the decision specifies that a new joint stock bank must have at least three member institutions, each with capital valued at a minimum of VND500 billion ($31 million) and each having been profitable for the last three years.
If the founding shareholder in the new venture is a commercial bank, the shareholder must have VND10 trillion ($625 million) in total assets, bad debt of below 2 percent of outstanding loans and must have been profitable over the last three years.
The decision also states that capital acquired to found a new bank must be owned by shareholders and not be loaned in any form whatsoever.
Each member institution can own a maximum stake of 20 percent of the bank’s chartered capital, and individual shareholders can hold only 10 percent at maximum.
A shareholder’s ownership can be raised with the approval of the SBV’s governor.
The founding shareholders must hold a total of 50 percent of the chartered capital, and are allowed to sell their stakes to others within the founder board five years after the bank’s launch.
Other shareholders are eligible to transfer their stakes in a bank three years after its founding.
The decision also states that foreigners are not allowed to act as founding shareholders in the new banks. They can, however, acquire bank shares after operations have begun.
Apart from the capital requirements, the new decision has set criteria detailing human resources, information technology and business strategy.
The plan for a new bank establishment must apply IT standards to the bank’s operation and the appointment of key management positions.
New bank must define the volume of expected business in years to come, basing estimates on current capital figures.
A SBV official said that about 24 proposals to set up new banks had been submitted to the bank, but none of them have been considered yet.
Kieu Hung Dung, head of SBV’s Banks and Non-bank Credit Institutions Department said the bank would take six months to examine each file.
However banking analysts commented that it was not easy to set up a new commercial bank due to the central bank’s tight rules on capital requirements.
SBV has recently issued a circular guiding the establishment of wholly-foreign owned banks and joint venture banks following the country’s WTO commitment to open up banking sector to all players.
Under its commitment to the WTO, Vietnam began permitting wholly foreign-owned banks on a par with domestic banks in April.
It has so far received at least ten applications for the establishment of foreign-owned banks from foreign financial institutions.
Source: SBV, Vietnamnet – Compiled by Dong Ha

Vietnam Eximbank sells nearly 18 pct to strategic partners
The Vietnam Export-Import Bank (Eximbank) has sold 17.8 percent of its shares, worth VND4 trillion (US$248 million), to 17 strategic partners.

Several monster companies including Saigon Industrial Corp., PetroVietnam Finance Company, Asia Commercial Joint Stock Bank, Nguyen Kim Trade Center, the Saigon Trade Corporation, and Kinh Do Corp. were among the strategic partners.

The acquisition details were unavailable.
Befor this acquisition, Vietnam’s largest confectioner Kinh Do Corp was Eximbank’s largest shareholder, holding a 6.42 percent stake, which the listed-confectioner had paid $90 million for.
The unlisted bank is considering selling a 30 percent stake under the central bank’s cap to foreign investors.
An Eximbank representative said the bank was targeting suitable foreign partners, placing a high priority on technology assistance and human resources that could help the bank achieve its goal of becoming the leading credit organization in Vietnam.
Temasek Holdings, an investment arm of Singapore government, has proposed to buy a 10 percent stake in the bank.
Founded in1989, the Eximbank has established correspondent banking relationship with more than 424 foreign banks in 49 countries enabling it to play an instrumental role in developing commercial financing and international trade.
It has a chartered capital of VND2.8 trillion ($175 million).
The bank has total assets of VND18.33 trillion ($1.1 billion), deposits of VND13.47 trillion, and a pre-tax profit last year of VND258.6 billion ($16 million).
Source: Nguoi Lao Dong - Compiled by Dong Ha

New banks will appear at year’s end: SBV

16:53' 14/06/2007 (GMT+7)

VietNamNet Bridge – Kieu Huu Dung, Director of the Banks and Non-bank Credit Institutions Department under the State Bank of Vietnam (SBV), said that new banks would be set up by the year's end after a decade during which the central bank did not licence any new banks.
Setting up new banks: green light on
Kieu Huu Dung, Director of the Banks and Non-bank Credit Institutions Department under the State Bank of VietnamThe newly promulgated regulation said that founding shareholders must not transfer shares within five years, while other shareholders must not transfer shares within three years. Will the provision violate the Enterprise and Securities Laws, if joint stock banks are considered public companies?

The question you have raised was voiced while we were compiling the regulation. However, I have to remind you that under the document guiding the implementation of the Enterprise Law, the establishment of banks will be covered by the Law on Credit Institutions, and SBV will set the conditions for bank establishment. Besides, the Enterprise Law stipulates that the Government has the right to set requirements on the establishment of companies in specific fields. In this case, the Government has drawn up a document authorising the Governor of SBV to stipulate the requirements.

The strict requirements mentioned in the newly enacted document aim to ensure healthy competition among banks, while they can help measure the commitment levels of investors when they decide to set up banks.

Under the newly promulgated regulation, investors must make heavy commitments. For example, bankers must show who will hold the most important posts. How can SBV supervise the commitment implementation of banks?

Investors must show who will hold the key posts in the banks. At least, the staffs must make commitments that they will work for the banks if the banks are licenced.

There will be two steps in licencing banks, SBV will approve the bank's establishment in principle first, and then will approve it officially. If you can satisfy basic requirements, you will get the approval in principle. When you can fulfill other procedures, you will get the official approval.

How long will it take to get licences?

I think it will take three months on average to get the approval in principle, and three more months to get official approval.

I know that many applications are now on the table of the State Bank. How many files meet the set requirements?

We have received more than 20 applications; however, all of them were sent before the new regulation was enacted. We have not made any official assessment on the applications.

Once the new regulation becomes valid (15 days after it is published in the official gazette), we will inform investors and ask them to change files as required. The investors will have to file applications again, and the day of file submission will be the day when investors submit applications again.

When will we see new banks set up under the new regulation?

This year, I think.

Many localities are seeking permission to set up local banks. What is your viewpoint on this?

It would be a big mistake to think that banks would serve these localities, because banks must operate nationwide. Besides, banks’ operations must not be controlled by local authorities. If authorities could influence banks, this would have bad impacts on banks’ operations.

If considering the provisions in the newly enacted regulation, not all localities can meet the stipulated requirements. For example, it is stipulated that banks must have at least three shareholders which are big enterprises and have the maximum capital of VND500bil. Only a few localities, including Binh Duong, HCM City and Hanoi, can meet the requirements, while other localities cannot. Of course, Hanoi-based enterprises can make capital contributions to a bank in another province, but enterprises in big cities do not like making investment in banks in other localities.

Now more and more general corporations and groups want to set up their own banks, so therefore they will have influence on banks’ operations. What should the central bank do to limit the influence?

Enterprises are not allowed to borrow money from the banks to which they make capital contributions. The Electricity of Vietnam, for example, and its members are not allowed to borrow money from An Binh Bank. Besides, one shareholder can hold 20% of the shares of a bank at maximum.

Phuoc Ha

BUSINESS IN BRIEF 14/6

11:11' 14/06/2007 (GMT+7)

Investment bank, Vincom team up for urban scheme
The Bank for Investment and Development of Viet Nam (BIDV) has reached a deal to provide banking and investment services to real estate giant Vincom Joint Stock Co.

The long-term contract will provide Vincom with priority interest rates, executives said on June 13.

“We hope this will bring more opportunities for both of us in terms of supporting investment capital, expanding operational networks (and) diversifying business sectors,” said BIDV general director Tran Bac Ha.

BIDV’s insurance wing will also become a shareholder in Vincom Securities Co when the company goes public.

The bank and Vincom plan to combine forces on a new urban development scheme north of the Red River in Dong Anh district and a high-end complex in HCM City.

”Vincom is one of the first enterprises in the private sector that BIDV decided to cooperate with. In recent years, the private sector has been growing speedily and we highly appreciate this development,” Ha said.

The State-run bank plans to increase its lending ratio to the private sector to 85 percent by 2010, he said.

The agreement is designed to foster long-term, sustainable growth for both companies, said Vincom CEO Le Khac Hiep.

Vincom JC Company, wholly owned by Vietnamese investors, includes Ha Noi Vincom Tower among its stable of properties.
Tighter rules released on new banks
The State Bank of Viet Nam imposed stricter requirements on the formation of commercial joint stock banks after issuing Decision No 22/2007/QD-NHNN on June 7.
Each bank must have at least VND1tril (US$62.5mil) in charter capital when it is established, and must increase that figure to VND3tril (US$187.5mil) by the end of 2008.
If one of the founding shareholders in the new financial institute is another bank, the shareholder must have VND10tril (US$625mil) in total assets, reduce bad debt to less than 2 percent of outstanding loans, and be profitable over the last three years.
If a founding shareholder is a company, it must have at least VND500bil (US$31.25mil) in capital and be profitable for the last three years.
The founding shareholders must hold a total of 50 percent of the charter capital, and are not allowed to sell or transfer their stakes to an outside party for five years after the bank’s opening.
No institutional shareholder is allowed to hold more than 20 percent of the bank’s registered capital, with the cap set at 10 percent for individuals. A financial institution buying a stake as a strategic investor can hold up to 40 percent of the shares and acquire even more if the prime minister approves.
Seeking consultants, meeting procedural requirements and obtaining approval from the State Bank of Viet Nam may take a new bank nearly twelve months, according to a senior central bank official, but the strict regulations are part of a screening and elimination process designed to weed out fly-by-night financial institutions being set up for a quick profit.
Vietnam real estate market attracts global investors
A new fund is seeking up to 600 million USD to invest in the nascent real markets of Vietnam and Cambodia , in a vivid sign of property investors going increasingly global.
England's Thomson Financial news quoted a representative of JSM Indochina, a company established to invest in the Vietnamese and Cambodian real estate markets, as introducing the fund on June 13.
JSM Indochina, which is advised by Lehman Brothers, is seeking 400-600 million USD on the junior Aim market, where scores of young overseas property funds have been listed over the past few years.
Expected economic growth, foreign investment momentum, youthful population dynamics, government reforms, developing real estate laws and large-scale urban infrastructure projects are creating a favourable environment for investment, said JSM Indochina.
The fund is to be managed by JSM Capital Indochina and will buy, develop and manage shopping centres and serviced apartments primarily in Vietnam's major urban centres.
Temasek to hold 10% in leading local seafood company
Singaporean-based investment company, Temasek Holdings Limited, will hold 10 percent in Minh Phu seafood joint stock company.
An agreement to this effect was signed between the two companies in Ho Chi Minh City on June 13.
Minh Phu is one of Vietnam's leading shrimp processing and export companies with an annual export turnover of 150 million USD.
The company, which officially listed its shares worth 3.3 trillion VND on the Ha Noi Securities Trading Centre, is also active in fish breeding and export.
With its rich experience in business management, Temasek Holdings is expected to help increase Minh Phu's position in international market, said Le Van Quang, Minh Phu's CEO.
According to Temasek Holdings Viet Nam chief representative Wong Heng Tew, Viet Nam is one of the most successful economic developing countries Asia and his company will seek for further investment opportunities in the country.
Temasek Holdings, one of Asia's largest investment companies, now pours 80 billion USD into various investment projects, focusing on telecommunications and communications, financial services, real estates, logistic, energy and natural resources, infrastructure, construction, technology and consumer goods.
Lilama rolls out bond issuance
The Viet Nam Construction and Machinery Installation Corporation (Lilama) issued 1,000 billion VND in bonds through the Deutsche Bank AG and the Habubank Securities Company.
Lilama said that the bond issuance would be used to raise capital for its Vung Ang 1 Thermoelectricity Power Project.
The ten-year bonds will be released in book-entry form and bear an annual interest rate of 9.2 percent.
VN-Index up, HaSTC down
The VN-index at the Ho Chi Minh City Securities Trading Centre climbed by 2.26 points to finish at 1038.8 points at the end of the June 13 morning trading session.
Traded volume was up with more than six million shares, worth over 631 billion VND, changing hands on the day, 50 stocks rallied for gains, 27 showed no change and 32 fell.
Saigon Thuong Tin Commercial Bank (STB), Financing and Promoting Technology Promotion (FPT), Song Da Infrastructure Developer (SJS) and Thermal Power Company (PPC) were amongst blue-chip shares recording heavy transaction volumes.
Meanwhile, Binh Dinh Mining Company (BMC) and the Tay Ninh Cable Car Tour (TCT) were among the big losers of the session with BMC dropping 27,000 VND to 520,000 VND.
The HaSTC-index at the Ha Noi Securities Trading Centre continued its downward trend, dropping 4.94 points to finish at 313.4 points.
Almost 996,000 shares, worth more than 104 billion VND, were traded during the day. Asian Commercial Bank (ACB) and Saigon Securities Inc. (SSI) led the market in terms of transaction volume.
(Source: VNA)

With all of this CONTINUOUS GOOD NEWS, one would wonder what is the holdup in an RV. I know that some people have stated that the IMF wants to prevent people from double-dipping with the Dinar and Dong. But, I wonder just how long Vietnam can wait before outside pressures force the Dong RV regardless of the Dinar.

Originally Posted by Maddawg

With all of this CONTINUOUS GOOD NEWS, one would wonder what is the holdup in an RV. I know that some people have stated that the IMF wants to prevent people from double-dipping with the Dinar and Dong. But, I wonder just how long Vietnam can wait before outside pressures force the Dong RV regardless of the Dinar.

I'm glad you said that...i was wondering the same thing myself.

As my son is so fond of saying, “How does it feel to want?” The IQD is a mix still being argued over in the kitchen by too many cooks that have never had to boil water before. On the other hand, I see the Dong ready for RV.

The real question here is, “How long is the IMF willing to allow the citizens of Iraqi and Viet Nam suffer”? One should have nothing to do with the other if it was a far race and all things being equal, but they are NOT IMHO!

DesertWolf

I found this on another forum a couple of days back but I don't remember if it has ever been posted here. This is definitely worth a read IMHO.



The central bank has said it no longer has a fixed target for the value of the dong for the end of 2007, but it would ensure the dong's value is on par with other currencies. http://www.thanhniennews.com/busines...2&newsid=28920