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Analysts suggest merger to brokerages hit by capital requirements
As the minimum capital regulation has forced many securities companies to cut back on the services they offer, analysts say mergers and acquisitions could be the way to go for them.
Decree No. 14, which took effect January 1, stipulates that brokerages must have a capital of VND25 billion (US$1.4 million) to provide stock broking services, VND100 billion ($5.8 million) to buy securities themselves, VND165 billion ($9.5 million) to offer underwriting services, and VND10 billion ($576,500) to provide consultancy.
Those seeking to provide all these services must have capital equivalent to the sum of all the amounts.
Chu Hoang Anh, general director of Gia Anh Securities Company, said his company has yet to find investors to sell its 80-percent stake.
The Hanoi-based brokerage has a chartered capital of VND22 billion and needs at least VND3 billion more to remain in business.
If the company fails to increase the capital, it can offer only investment consultancy, he said.
Nguyen Chi Thanh, chairman of National Securities Inc., said mergers may be the solution for such companies.
As foreign firms know all too well about some of these companies’ financial difficulties, they pick up stakes in them at very low prices, he said.
In such cases, merging with other struggling securities firms may be a better option, he said.
Nguyen Quang Thuan, managing director of StoxPlus Financial Media Corporation, said M&A would help struggling companies cut costs.
Pham Diem Hoa, general director of Wall Street Securities, agreed, saying that after a merger, a securities firm may not only have enough capital to offer all its services but also expand by offering further services like over-the-counter transactions, gold trading, and corporate investment consultancy.
Dau Tu Chung Khoan
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