Banks warned about risks of property corporate bonds
28/08/2019 17:04 | Source: VOV
Recently, State Bank of Vietnam has instructed local banks to better control risks in corporate bond investment, especially bonds of property firms.

After reviewing the business performance of banks in the first half of 2019, State Bank of Vietnam (SBV) saw the corporate bond investment of some banks facing risks as the ratio of such investment was high and is continuing to increase.

The amount of bond investment in construction and property enterprises at some banks accounted for a large proportion of the banks’ total assets while the real estate market has not yet recovered firmly and the business performance of realty firms still faces lots of challenges.

Real estate corporate bond

Moreover, several banks also invested in bonds with other purposes, such as to restructure debts of issuers, which have high risks.

To ensure the safety of the banking system and limit risks in corporate bond investment, SBV asked banks to review their internal regulations related to the appraisal and approval procedures of corporate bond investment.

The central bank also directed commercial banks not to buy corporate bonds, which have the purpose to restructure the debts of issuing firms, in accordance with current laws.

Total corporate bond issuance in the first six half of the year hit VND60 trillion ($2.58 billion), according to the State Securities Commission.

Also, Deputy Prime Minister Vuong Dinh Hue has asked for stricter supervision on corporate bond issuance so that the finance and equity sectors operate properly and safely.

Deputy PM requested the Ministry of Finance, the State Securities Commission and the SBV to supervise the corporate bond market carefully and create a development plan for the corporate bond market.