A huge sum worth of bonds will mature this year and next year, putting pressure on their issuers, mostly property developers. Photo tuoitre.vn

HCM CITY — The State Bank of Việt Nam has carried out surprise checks of 11 commercial banks to find out if they are in compliance with regulations governing bond purchases by lenders.

They were also meant to ensure the banks are in line with the Government’s requirements related to monetary policies and restructuring of bad debts.

The central bank said in a release that it had fined a number of them but did not identify them.

Banks are prohibited from buying bonds issued by a business to restructure its debts or raise working capital.

The SBV has instructed banks not to lend to risky sectors such as real estate and to ensure capital flows into priority fields such as manufacturing.

It would keep close watch on credit institutions to ensure they comply with regulations while investing in bonds, it said.

The central bank also plans to make credit ratings mandatory for bonds issued to the public to ensure the market is healthy and transparent.

It said it would work with the Ministry of Finance to draw up a legal framework for the bond market to make it an important source of capital for the medium and long terms.

As of the end of last year, joint stock banks were holding nearly VNĐ190 trillion (US$8.09 billion) worth of corporate bonds.

They included VietinBank, BIDV, Vietcombank, Military Bank (MB), Techcombank, VPBank, TPBank, SHB, BảoViệt Bank, HDBank, VietinBank, Bac A Bank, OCB , MSB, NamABank, VIB, Kiên Long Bank, and SeABank.

MB, Techcombank, VPBank, TPBank, and SHB had the biggest holdings. 

Banks also act as underwriters and sell bonds issued by companies. Recently there have been complaints from the public who bought bonds through banks that they have not been paid principal and interest on time.

A recently issued government decree that seeks to resolve problems faced by the corporate bond market has not proved effective enough to bring back investor confidence, experts said.

The decree, which allows issuers to extend bond redemption by up to two years, only helps prevent the market from collapsing but does not protect the rights and benefits of bondholders, they said.

Bonds worth a huge amount of money are set to mature this year and next, putting great pressure on issuers, most of them property developers, who now face liquidity problems and cannot make new issuances to restructure their debts, they added.

Recently a number of people have filed a lawsuit against the Sài Gòn Joint Stock Commercial Bank (SCB) and Tân Việt Securities for “cheating.”

The plaintiffs, mostly long-term depositors in the bank, said they had been sold corporate bonds by the bank’s staff but led to believe they were depositing in a “flexible saving-like product” from which they could withdraw money at any time after 31 days.

The Ministry of Public Security has begun an investigation.

Last October the central bank placed SCB, one of Việt Nam’s largest private banks, under special control following the arrest of the chairwoman of property developer Vạn Thịnh Phát for alleged fraud related to issuance and trading of corporate bonds worth trillions of đồng. — VNS