VietNamNet Bridge – The deadline of March 17 for banks to purchase compulsory bonds will not be extended as banks had expected.

The governor of the State Bank of Vietnam has sent a dispatch to commercial banks, instructing them to strictly follow the instruction to purchase compulsory bonds by March 17. The Monetary Policy Department will have to report to the governor about the banks’ purchase by the end of March 17.

As such, the State Bank decided not to extend the deadline of March 17 as it previously planned as the bank finds it unnecessary to do that.

Prior to that, commercial banks complained that they seriously lacked VND capital and they would not be able to arrange enough money to buy compulsory bonds by March 17.

Forty-one credit institutions, listed in the Decision No 346 dated February 13, 2008 for purchasing compulsory bonds, will have to pay money to buy bonds on March 17, with no exceptions.

Three state-owned banks out of the 41 banks have to buy 44.3% of value of the bonds. Among joint stock banks, ACB will have to buy the biggest volume of bonds, worth VND1,500bil.

Analysts said that the central bank will not delay the bond purchase as requested by commercial banks because the bank believes that commercial banks are now financially capable enough to purchase bonds, and the purchases will not affect their liquidity.

Hanoi: VND20.7tril injected in real estate

It is estimated that banks have been injecting nearly VND20.7tril in real estate. Of this amount, 72.8% are medium- and long-term loans. The loans to fund house repairs and house purchasing deals account for the biggest proportion, at 38%. Real estate credit is now over 10% of total outstanding loans of local banks.

In HCM City, real estate credit also accounts for 10% of total outstanding loans, but the fixed sum of loans in HCM City is higher than in Hanoi.

Hanoi’s real estate credit rose sharply in 2007, from 3% to 10% of total outstanding loans. However, commercial banks are tightening real estate credit in 2008 for fear of risks. Hanoi’s real estate market is cooling down with few successful transactions, though prices are staying firm at high levels.

Trinh Ngoc Lan