Loans galore for domestic brokerages

Financing from international banks could help local groups like Techcombank maintain momentum, Photo le Toan

SSI Securities, Vietnam’s major brokerage, last week bagged a fresh syndicated loan of $148 million from a group of world-renowned financial institutions, led by Union Bank of Taiwan and Taishin International Bank.

The fund is deployed to replenish capital adequacy and support business operations, as well as to raise the brokerage’s efficiency at competitive costs.

Financial services such as guarantees, exchange rates, derivatives, credit-related markets, and equity sales to international partners are all potential areas of expansion for the partnership between SSI and Union Bank.

SSI’s head of Investment Banking Division, Nguyen Ngoc Anh, told VIR, “These syndicated loans from international financial institutions have clearly shown foreign partners’ confidence in our growth prospects.”

VNDIRECT Securities Corporation also announced unsecured loan syndication with a total deal size of $100 million with a group of foreign financial institutions in late last December.

Cathay United Bank served as the only Mandated Lead Arranger and Bookrunner (MLAB) in this transaction, which was launched in last September with an initial deal size of $98 million and a greenshoe option of up to an additional $100 million in aggregate.

Cathay United Bank also prompted an unsecured loan syndication package of $104 million, with the involvement of 12 Taiwanese financial institutions, to lend Ho Chi Minh City-based brokerage HSC in late 2021.

This is HSC’s third loan with Taiwanese financial institutions. The previous two were for $50 million and $44 million, respectively.

Besides securities companies, some local lenders could also improve their diverse financial ecosystem from the syndicated loans backed by foreign banks.

Local lender VIB inked a $260 million syndicated loan arrangement a fortnight ago with Asian Development Bank (ADB) focusing on small- and medium-sized companies (SME), private firms, and individual clients to access more financing opportunities.

The financing consists of a direct loan of $100 million from the ADB and a syndicated loan of $160 million brokered by the ADB and UOB from nine Asian financial institutions. Following the receipt of these funds, VIB will expand its offerings to those who seek to purchase or repair homes, as well as to private commercial operations and firms in Vietnam.

VIB CEO Han Ngoc Vu said, “This is a crucial development since SMEs are now in high demand for money to bolster production, and contributions are required to enhance living circumstances for retail clients.”

Last November, Techcombank completed the biggest offshore syndicated loan facility in the country’s history, with a total value of $800 million – a record size and structure for Vietnamese banks.

This is Techcombank’s second foray into the offshore loan syndication markets, after its first success, which also established a new record in 2020. In addition to enhancing Techcombank’s capacity to satisfy its customers’ growing medium- and long-term financial requirements in both foreign and local currencies, the loan proceeds are utilised for general corporate and working capital purposes, as well as for capital expenditures.

According to VNDIRECT, the stock market’s margin balance is expected to reach a record high of around $10 billion at the end of Q1. Previously, the margin balance of the whole market reached $8.4 billion on December 31. The greatest margin lending share last year was held by SSI, followed by Mirae Asset Securities.

The number of new investors joining the market grew at a breakneck speed in 2020-2021, but securities firms’ capital expansion lagged behind.

Securities businesses are only permitted to lend up to twice their equity under existing restrictions, which puts some major brokerages close to the limit.

With fresh affordable financing sources from international banks, Vietnam’s brokerages could maintain their growth momentum and stay ahead of the game.

According to Ho Chi Minh City Stock Exchange’ latest statistics on brokerages’ market share, the rankings for Q1 continued to shift significantly. The top five securities firms with the biggest market proportion remained the same as in the previous quarter, with VPS, SSI, VNDIRECT, TCBS, and HSC rounding out the list. However, HSC’s decline aided TCBS in its ascension to fourth place.