While raising the tier 1 capital is difficult, banks have been shifting to mobilise tier 2 capital by issuing bonds to supplement input sources to increase medium and long-term credit as the State Bank of Vietnam (SBV) increasingly tightens the ratio of short-term capital for medium and long-term loans.
Last week, Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank) and Asia Joint Stock Commercial Bank (ACB) announced their bond issuance plan of up to 15.5 trillion dong.
In particular, VietinBank is allowed to issue total bonds with par value of 10 trillion dong for the whole year with interest rates decided by the bank, in accordance with the current legal regulations, ensuring business efficiency and security. VietinBank is currently holding more than 32 trillion dong of bonds, in which the amount of bonds with tenor of more than five years is 26.515 trillion dong.
As for ACB, this bank’s Board of directors also approved the second plan of issuing private bonds in the fiscal year 2019 with a total of 5.5 trillion dong with a term of two and three years. The above bonds will be issued by ACB in five times according to the method of issuing agents. The interest rate applicable to bonds is a fixed interest rate during the issuing period, specifically depending on market conditions and investors’ demand, but not exceeding 6.75 percent per year for the term of three years and 6.7 percent per year for two year term.
Previously, since the beginning of the year, Hochiminh City Development Joint Stock Commercial Bank (HDBank) is the first bank in the successful bond issuance system in 2019 with a total of 2.5 trillion dong (in which, 1.1 trillion dong of two-year term bonds and 1.4 trillion dong of three-year term) with interest rate from 6.3 percent to less than seven percent.
In 2018 there were many banks that issued bonds. Our figures show that only six big banks, Vietcombank, BIDV, VIB, HDBank, VPBank, VietinBank have issued a total of over 32 trillion dong of bonds, with terms of two years, three years, seven years, 10 years, 12 years and 15 years.
