Vietnam Central Bank Orders Banks To Report Exposure To Property Market
Tuesday November 18th, 2008 / 12h07
HANOI -(Dow Jones)- The Vietnamese central bank ordered all banks operating in the country to submit reports detailing their loan exposure to the cooling property market by Friday. The move reflects rising concern among the authorities that the slowdown gripping the real estate sector could lead to ballooning bad debts for the lenders. "Banks must provide statistics about their loans to property projects that weren't completed by Oct. 31," the State Bank of Vietnam said in a statement Tuesday. The institutions must also report their risk assessment of loans they expect to make by Dec. 31, and a similar study of loans expected to be made in the first half of 2009, the statement said. State Bank of Vietnam Governor Nguyen Van Giau last week said that local banks have lent VND115 trillion ($6.8 billion) to the property market, accounting for 9.15% of total loans. Ho Chi Minh City-based analysts said the SBV's decision to scrutinize the banking sector's exposure to the property market reflects a shift from the government's stance of supporting greater lending to bolster the economy. Prices of many property projects, from housing to office and industrial developments, have fallen between 30% and 70% across the country, they said. The plunge in value has hurt property investors as well as construction companies, many of which are near bankruptcy, said Sacombank Securities chief analyst Nguyen Huy Cuong. "The central bank's tight monetary policy has resulted in serious difficulties for many property developers," he said. In June, the central bank hiked its benchmark rate to 14%, pushing commercial banks to lift lending rates as high as 21% and jacking up financing costs for property developers. While the SBV lowered its benchmark rate to 12% early this month, the developers say bank loans remain prohibitively expensive with interest rates around 14%. -By Nguyen Pham Muoi, Dow Jones Newswires, 84-913-220-614; phammuoi.nguyen@dowjones.com
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