At a recent meeting held by the Vietnam Chamber of Commerce and Industry (VCCI), Ms Nguyen Thi Nga, Chairwoman of Southeast Asia Bank (SeABank), owner of Dong Mo Golf Course and owner of public-catching takeover of Hilton Opera Hanoi Hotel, revealed "secrets" of the banking system attributed to lending inaccessibility of businesses that leads many to moribund state or bankruptcy. The following is part of her speech at that meeting.
Banks exert themselves to run after “nice indicators”
SEABank is a grade-A bank. It stands in the Group 1 out of four groups classified by the State Bank of Vietnam (SBV). In terms of liquidity, we have a lot of money in excess but we are too afraid to lend.
We fear because if we cannot take back our loans, we will lose liquidity. And, if we lose liquidity, the State Bank will send us to the lower groups of banks which are imposed low or zero credit growth.
All banks race after ‘nice indicators’ to be listed in the Group 1. If we lend and cannot take the money back on time, we will be sent to the Group 2 for the overdue period of over 10 days and to the Group 3 for the period of 90 days and so forth. It is thought that banks still make a good profit in times of economic slowdown but data are only displayed on paper and calculated by computers. Indeed, we have not taken back our money. In the worst case, we will lose not only our ‘theory’ profit but also the principal.
It is noteworthy that delinquency ratio is capped at 3 percent by the State Bank. Personally, in this case, I prefer keeping money in my hand because if we lend it, my money will be classified in accordance with Decision 493/2005/QD-NHNN.
Interest rate at 20-30 percent: I am also horrified
Overdue debts will result in two possibilities. First, borrowers have to pay 150 percent of interest rate for their overdue time. I think businesses can bear annual lending rates of 20 percent but they cannot afford 30 percent rates. In reality, many companies are qualified for lending but they dare not to apply for loans. Second, if banks suffered debt debts exceeding 3 percent, they will fall out of the Group 1. Their names will be ill-reputed and customers will stay away from them.
Personally, I not only run the bank but I am also in charge of many companies involved in different industries. Thus, I clearly know that a company cannot bear an annual interest rate of 20 percent
And, indeed, I think the “State Bank also does not encourage lending.” I personally hope that the central bank will expand the scope of borrowers operating in agriculture, rural development, export, import and essential commodity production.
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Nguyen Thi Nga now owns BRG Group. She is also the owner of Dong Mo, Do Son and Soc Son golf courses. She is the chairwoman of SeAbank. She was very well-known to the investor world when she stood up in the process of equitising Intimex Company. She is a major shareholder and an attorney for many other shareholders to claim the chairmanship in a company with many valuable real estates. She was admired for taking over Hilton Opera Hanoi Hotel - a hotel in a prime location in Hanoi. The purchase of the 5-star hotel only went to the public after it was successfully concluded.
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Vietnamese
