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Small securities companies planning to narrow business scale
Most of the 35 securities companies that do not have enough chartered capital as stipulated by Decree 14, guiding the implementation of the Securities Law, are considering cutting some services.
According to the decree dated January 19, 2007, securities companies must have the chartered capital stipulated in the decree within two years of the day the decree became valid. This means that the companies have one month left to either raise their chartered capital or cut some types of services.
Most of the companies told Dau tu chung khoan newspaper that they would choose the second solution, since the market is now too gloomy to raise more capital.
When asked about the types of services the companies would cut, most said the securities issuance guarantee service. Under the new regulations, securities companies must have VND165bil in chartered capital to offer this service. In fact, even if they have VND165bil, securities companies would have no job to do now in the context of the gloomy market. Very few companies plan to issue securities at this moment, and only very few companies dare provide the securities issuance guarantee service.
Nguyen Chi Thanh, Chairman of the National Securities Company, said that the company would hold a shareholders’ meeting next week to discuss cutting services, saying that the leadership plans to keep the brokerage service only.
However, Thanh said that the company still plans to increase its chartered capital by VND20bil to VND70bil.
Thanh said that the company spent a sum of money on trading deals and suffered losses. If the company only keeps the brokerage service, it will have to sell the securities it is holding. However, Thanh said that it is really difficult to sell stocks at this moment, adding that he hopes the State Securities Commission (SSC) will issue instructions for this.
The director of another securities company also said that the company planned to maintain the brokerage service, and the management apparatus, including the chairman of the board of directors, general director and chief accountant. The company will expand its operations when the market recovers.
In fact, not only these 35 companies are considering scaling down their business, other companies are also considering doing this to reduce expenses to help them survive the current difficulties.
“If the current difficulties continue until the end of 2010, the company will dissolve, but I hope the situation will not be so serious,” said Doan Duc Vinh, Chairman of Au Viet securities company.
Sources say that securities companies are considering selling themselves to foreign partners; however, foreign partners themselves now have their own difficulties. That is why experts believe that very few merger and acquisition deals will be made.
Huynh Anh Tuan, General Director of SJC Company, said that foreign investors prove to be very cautious with the deals. They are more interested in companies which only provide services and don’t make trading deals themselves. Meanwhile, most companies established before 2008 have made trade deals and incurred losses.
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