Under the draft, the SBV's proposed asset-liability management rule reduces the share of short-term funding that banks can use for loans longer than 12 months to 40 per cent from 60 per cent. — vneconomy.vn

Viet Nam News -HÀ NỘI — Commercial banks are recommending that the State Bank of Việt Nam (SBV) delay tightening of lending rules, as it could face difficulties once it takes effect on January 1, 2017.

The SBV in February, issued a request for comments on its amendments to Circular 36, which would set stricter rules on asset-liability management and on providing credit to the real estate sector in an effort to restrain the liquidity risk and the mass of credit flow into the real estate sector.

Under the draft, the SBV’s proposed asset-liability management rule reduces the share of short-term funding that banks can use for loans longer than 12 months to 40 per cent from 60 per cent.

In addition, the SBV also proposed an increased risk weighting of real estate loans to 250 per cent from 150 per cent, which limits the credit growth of banks in this sector.

However, banks said that they would face numerous difficulties if the new regulation takes effect as scheduled.

Phan Đức Tú, general director of the Bank for Investment and Development of Việt Nam, said that it is currently difficult for banks to mobilise long-term capital in the domestic market as local depositors often choose short-term tenors. The reduction of short-term funds for medium- and long-term loans therefore would be tough for banks, he said.

They, therefore, suggested to the central bank that they adjust the itinerary for the application of the regulation to make it according to the capital mobilisation in the local market.

Banks said that right after the release of the draft circular, they adjusted the interest rates for long-term deposits on numerous occasions to woo depositors. However, mobilisation is not as good as they expected.

In fact, the proposed regulations will not affect banks in the short term as the ratio of short-term funds for medium- and long-term loans at many banks is still below 40 per cent, meeting the central bank’s regulation.    

The ratio at BIDV, for example, is currently at 37 per cent, according to Tú.

General Director of SHB Nguyễn Văn Lê said that the ratio at his bank is 32.4 per cent and the bank’s plan this year is to gradually reduce medium- and long-term credit while increasing short-term tenors.

Leaders of Vietcombank said that the bank’s space for medium- and long-term credit remains large as the bank’s ratio of short-term funds for medium- and long-term loans is currently only 24 per cent.

Representatives from ACB also said that the bank would not be affected by the new regulation in the short term as its ratio of short-term funds for medium- and long-term loans is at 27 per cent.

However, the representatives admitted the proposed regulations would impact the bank in the long run and the bank is looking for measures to adjust the capital inflows to the new rules. – VNS