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2008: Bigger securities companies suffer bigger losses
Nearly 70% of the 26 securities companies which have released 2008 financial reports were in the red last year. In fact, the losses were forecast in mid 2008.
The other companies might have made profit, but most only made modest profit, except the Saigon Securities Incorporated. The loss levels prove to coincide with the warning given by Nguyen Thanh Ky, Secretary General of the Vietnam Association of Securities Business (VASB) several months ago.
The huge losses
The biggest surprise is the big loss of VND554bil suffered by the securities company under the Bank for Investment and Development, BSC. With such a huge loss, BSC now has VND274bil in stockholder equity only, while its chartered capital is VND700bil.
However, BSC’s ratio of loss to chartered capital is 79.16% only, not the highest figure. Meanwhile, Bao Viet Securities Company (BVSC) has the highest ratio: It has suffered the loss of VND452bil, while its chartered capital is VND451bil, or 100.2% of chartered capital. The poor performance of BVSC has surprised many investors.
However, BVSC still maintains the high stockholder equity of VND1,067.57bil thanks to a surplus from securities issuances in previous years and accumulated money. Some other securities companies also have high ratios of loss to chartered capital, including Kim Long, Au Viet and Hai Phong.
Preliminary analysis shows that securities companies lost money mainly because of poor securities trading results. BVSC had to put aside a provision of over VND445bil for financial investments, VNDirect VND105.8bil, Hai Phong VND87.7bil.
Only two companies still made profit notwithstanding high provisions of funds: HCM City Securities Company (provision of VND200bil, post tax profit VND23.54bil) and SSI (VND25.7bil, VND250.5bil).
And consequences
The losses suffered by securities companies were forecast as unavoidable consequences of the plummeting stock market.
Of the said 26 securities companies, several had stockholder equity less than VND100bil by December 31, 2008, when they needed the capital level to carry out securities trading activities, including Euro Capital, Nam An, Phu Hung and Gia Quyen.
The National Securities Company, for example, has seen stockholder equity fall to VND20.4bil, lower than the required minimum level of VND25bil to be eligible to provide brokerage services. Vision Securities Company, though having raised its chartered capital to VND25bil, has VND11bil only in stockholder equity.
Under the draft regulation on the financial self-control of securities companies being compiled by the State Securities Commission, companies which incur the loss of over 30% of chartered capital will be either put under control, put under special control, or have the operation licences revoked.
VietNamNet, DTCK
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