Banks Unwilling for Large Property Loans

The real estate market still remains frozen despite a new land decree No.17, which aims at boosting the market, largely due to local banks’ reluctance in lending loans for risky long-term projects, Tran Ngoc Minh said, director of the State Bank of Vietnam’s branch in Ho Chi Minh City.

 

To reduce business risks, commercial bank directors in a meeting in Ho Chi Minh city earlier this month said long-term property projects would not be a major part of their loan portfolio.

 

Le Dac Son, director of VP Bank, stressed most non -State commercial joint stock banks viewed real estate as a high-risk business.

 

Son added that the bank was focusing on lending to individuals who want to buy houses or land under the installment plan and not giving out loans for the purchase of large land plots or the construction of major apartment buildings.

 

Nguyen Huu Chinh, deputy general director of Eastern Asia Bank shared the same view saying that his bank is not going to invest in big property trading projects.

 

Accordingly, banks said they would take part in the real estate market only when more long-term capital sources could be created.

 

The Decree 17 under the Land Law issued in late January by the communist-run government contains many regulations that encourage transactions and abolish regulations that many saw as a major cause behind the real estate slump over the past two years.

 

Developers had expected the property market to bounce back but it has remained inactive.