The State Bank of Viet Nam issued Circular No 26/2012/TT-NHNN, guiding approval procedures for listing shares of joint-stock credit institutions on domestic and foreign securities markets.
Joint-stock credit institutions, including banks and financial companies, are expected to face even more difficulties to be listed on the stock market after the central bank's newly issued circular goes into effect on October 29.
On September 13, the State Bank of Viet Nam issued Circular No 26/2012/TT-NHNN, guiding approval procedures for listing shares of joint-stock credit institutions on domestic and foreign securities markets.
According to the new circular, joint-stock credit institutions, including joint-stock banks, joint-stock financial companies and joint-stock financial leasing companies, will be required to meet nine conditions if they want to get permission from the SBV to list shares on the stock market.
One of the strictest regulations concerns the non-performance loan (NPL) ratio. At the end of the quarter, it must be less than 3 per cent of the total outstanding loan during the two quarters preceding the application, instead of two years as the current rules require.
In the context of current economic and financial difficulties, many banks, including major ones, are unable to keep their NPL ratio under 3 per cent for two quarters.
Banks are also required to perform debt classification and risk provisioning at the end of the quarter, preceding the quarter of application, in accordance with the SBV's regulations.
Many banks find it difficult to meet the rules of SBV Decision No 493 on classification of debts and loss provision for banking operations of credit institutions. Thus, many of them do not have qualified risk-reserve funds.
The new circular also says that subjected credit institutions must comply with restrictions to ensure safe operations in accordance with applicable legal texts for a continuous six-month period, preceding the time of application for listing shares.
The credit institutions eligible for being listed must have an internal audit entity and internal control systems to ensure compliance with Article 40&41 of the Law on Credit Institutions and other relevant legal texts.
This regulation is also difficult for many banks to realise because many of them do not have qualified internal audit entities or control systems.
The circular also requires that joint-stock credit institutions will have an operational duration of at least two years, up to the date of the application, instead of five years in the current rule.
Nine credit institutions are listed on the domestic stock markets: the banks ACB, CTC, EIB, MBB, NVB, SHB, STB and VCB as well as a finance company PVF.
Many banks planned to list their shares this year, but they may have to delay their application because of strict regulations. They include Nam A, Phuong Nam, Dai A, DongA, Techcombank, Quoc Te and HDBank.
