Vietnam Daily News

Vietnam banks boost lending to four items

Written by Dailynews.vn Saturday, 17 December 2011 17:44

Since the State Bank of Vietnam removed four lending items from the non-production sector, many banks namely An Binh Commercial JS Bank and Ocean Bank and other financial companies have started to expand lending.

Black credit is not a way-out

Short term investors in Vietnam real estate market compulsorily were keeping assets in long term; however it was very hard to offload. Being urged to pay money according to agreed progress while the liquidity of land was losing and banks refused to provide loans, many investors were forced to borrow black credit.

In the midst of September, Hanoi was shaking by the bankruptcy of a young businessperson in Dan Phuong Dist. The bankrupt value was up to 500 billion dong which he and his wife borrowed from many people with a promise to pay high interest rates.

According to the declaration of the businessperson, one of reasons leading to his bankruptcy was that he had taken bank loans for realty trading. When the real estate market went down, he had to borrow black credit with the interest of 5 million dong per day equaling to 15-21 percent per month to repay bank debts.

Factually, sudden stop of some commercial banks in property-backed lending pushed up operation of black credit, becoming the sole way out of those in need of money. But due to black credit, a lot of people fell in big debts and bankruptcy.

Reducing off-load

Some short-time property investors are running to repay bank loans because taking capital from banks is a lucky exit instead of borrowing black credit.

A survey in some land markets in Hanoi, the number of land sales offering in some projects this week declined, especially some land lots were offloaded successfully, namely Geleximco at 38 million dong per square metre in small roads and 45-48 million dong/sqm in big roads, Van Canh project ranging between 40-48 million dong/sqm, Van Phu project at current 55-60 million dong/sqm, associated houses of An Hung project offered at 65-67 million dong/sqm and villas at 52-55 million dong/sqm.

Nguyen Trong Ky - deputy general director of Techcovina Real Estate Co said that the increased offloading of property was attributed to investors' money need to repay bank debts. But the deadline for maturity of banks loans is coming, so the offloading is easing. The market is expected to be more relaxed in the forthcoming time.

Some experts said, although lending rates remained high at around 20 percent per annum, bank loans still are a lifebuoy for those who are debtors of black credit market.

Source: www.intellasia.net/news/articles/finance/111351125.shtml