The State Bank of Viet Nam (SBV) has approved Vietcombank’s proposal to issue bonds worth VND8 trillion (US$353 million) in 2017.

The bonds’ interest rate will be determined by Vietcombank, but it will have to be in accordance with current market interest rates and the central bank’s regulations for interest rates in each period.

Vietcombank can sell its bonds to local and foreign individuals and organisations. However, credit institutions and their subsidiaries and foreign banks’ branches are not allowed to buy bonds from the primary market.

The bank will also be permitted to buy back these bonds. The SBV requires Vietcombank to maintain the safety ratio when purchasing the bonds back. If bonds are calculated in tier 2 capital, their acquisition must comply with all current regulations.

In 2016 too, Vietcombank had issued bonds worth VND8 trillion to the public and to financial institutions after getting a nod from the SBV.

In all, 10-year, non-convertible bonds worth VND2 trillion were offered to the public without collaterals; and bonds worth another VND6 trillion were used to raise tier 2 capital. The interest rate was calculated as reference rate plus 1 per cent, and the rate applicable for the first year was 7.57 per cent. — VNS