Vietnam central bank extends restriction on stock, real estate credit

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The State Bank of Vietnam will continue to restrict credit for the stock and real estate markets, but lending to certain segments will be eased, officials said Tuesday.

"Stock and real estate will not be the priority sectors for credit in 2012," Deputy Governor Nguyen Dong Tien of the State Bank of Vietnam said at a press briefing in Hanoi. "Necessary adjustments will be made for some segments, but not across the board."

Loans for non-production sectors were successfully controlled at 11.3 percent of total credit last year. However, the ratio at a few banks exceeded the allowed level of 16 percent and they will receive warnings, Tien said, without naming the lenders.

Vietnam began tightening lending to non-production sectors last year in order to focus on providing loans for exporters, manufacturers and agricultural producers.

The central bank eased the credit squeeze in November, allowing lenders to offer loans to low-income housing projects or other residential projects that can be completed soon.

This year, the central bank has targeted total credit growth at between 15 and 17 percent, compared with an expansion of 10.9 percent in 2011. For real estate, stock and consumer loans as a group, the growth is capped at 16 percent.

For the first time, various annual credit growth targets have been allocated to domestic banks this year.

The central bank has divided banks into four groups, which will have credit growth of 17 percent, 15 percent, 8 percent and zero respectively.

"Various factors have been considered when classifying banks, including capital, management, asset and debt quality, and their violations of government policies," Tien said.

The central bank did not name the banks in each of the four groups. It said the classifications and the assigned credit limits will be reviewed after six months.

At least 10 Vietnamese banks will face restrictions preventing them from expanding credit growth this year, Bloomberg reported, citing Tien as saying. He also said foreign banks that have recently increased their registered capital will face a credit growth limit of 17 percent.

At Tuesday's press briefing, central bank officials also said they would take strong actions against any lenders violating the limit of 14 percent on dong deposits.

"Banks breaking the cap will be punished strictly," said Nguyen Dang Hong, a senior inspector at the central bank.

Individuals responsible for the violations will be dismissed while their banks will be banned from opening new branches and setting up new automatic teller machines, Hong said.

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