Billionaires in the hand of banks

By Minh An - Mar 17, 2018 | 09:13 AM GMT+7

TheLEADERBeing a billionaire by owning billions of dollar of assets, many Vietnamese businesses use these assets to secure their loans or related companies at banks.

Besides Pham Nhat Vuong and Nguyen Thi Phuong Thao, there are two Vietnamese businessmen's names placed in the World’s Billionaires list 2018 announced by the reputable Forbes last week.

Vietnam also has another entrepreneur who is announced the ownership of more than US$1 billion by Bloomberg. This person is Nguyen Dang Quang, chairman of Masan Group.

Vietnam billionaires announced by Forbes and Bloomberg.

If based on stock market statistics, the list of billionaires in Vietnam may be longer. In particular, Trinh Van Quyet, Chairman of FLC Group, has assets of over US$2 billion.

Although Forbes and Bloomberg did not recognize Trinh Van Quyet as a billionaire because he did not meet the criteria in the asset valuation method, this does not mean that Quyet's assets are worthless, at least for with banks.

According to a reliable source, tens of millions of FLC Faros's shares (ROS) have been used as collateral for bank loans.

FLC Faros of which Quyet holds more than 65 per cent stake is the construction company in charge of most of FLC's projects. Listed at more than VND10,000 (US$0.44) since the end of 2016, this company's shares increased to VND150,000 (US$6.58) and then VND200,000 (US$8.78) by the end of 2017.

This was also the time when ROS shares began to be used as collateral for bank loans. According to a security transaction on November 29, 2017, the National Citizen Commercial Joint Stock Bank received a security asset of 17 million ROS shares owned by Quyet and his wife. This number of stock had a market value of nearly VND3,000 billion (US$131.7 million) at this time of transaction.

At the end of December 2017, five million ROS shares were used as collateral at Orient Commercial Joint Stock Bank. On last February 7, seven million shares of ROS as security assets at the National Citizen Joint Stock Commercial Bank.

Using stocks as security assets has long been used by billionaires in Vietnam in order to raise capital for business. In fact, the richest person in Vietnam, Pham Nhat Vuong, also had a security transactions in the past by Vingroup shares mainly through Techcombank for many years.

Last December, 37.1 million shares of Vingroup (VIC) were used as collateral at Techcombank with the price of VND65,000 (US$2.85) per share, equivalent to a total value of more than VND2.4 trillion (roughly US$105.4 million), only ten per cent less than the stock price.

Tran Dinh Long, a new billionaire from Vietnam in the Forbes's list, has also repeatedly used Hoa Phat Group shares as collateral for loans at BIDV, Vietcombank and Vietinbank.

Similarly, in the period from 2011 to 2014, Tran Ba Duong's Thaco shares were also used as collateral in various banks. In 2014, Duong and his wife used more than 42 million shares of Thaco in order to secure this company's loans in Vietcombank.

Nguyen Dang Quang's Mansan Group also used this company's shares (MSN) as a security asset for loans in many banks. In addition, Quang's wife, Nguyen Hoang Yen, owns more than 42 million MSN shares and late last year, over nine million shares from this amount were registered for secured transactions at Vietcombank.

An important part of determining the wealth of billionaires is to calculate the shares worth trillions dong they hold. However, most of these stocks are "frozen" in the banks as secure loans for individuals or companies.

When the borrowers cannot repay the loans, the lenders can handle the secured assets including the form of transferring these shares. In addition, in cases that the market value of the shares used as collateral reduced, the lenders may require the borrowers to add the new collateral.