Government Inspector: Many banks violated when issuing bonds

(Dan Tri) - The total amount of money misused amounts to thousands of billions of dong.

The Government Inspectorate has concluded its inspection of compliance with legal policies on the issuance of individual corporate bonds and the use of funds from individual corporate bonds.

Issued more than 255,000 billion VND

It is noted that in the period from January 1, 2015 to June 30, 2023, among 67 issuing organizations, there were 5 commercial banks (CBs) including: Military Commercial Joint Stock Bank (MB), Asia Commercial Joint Stock Bank (ACB ), Vietnam Prosperity Joint Stock Commercial Bank (VPBank), Vietnam International Commercial Joint Stock Bank (VIB), Orient Commercial Joint Stock Bank (OCB) issued a total of VND 255,107 billion, for the purpose of lending to customers (mainly bonds issued without collateral).

According to the conclusion of the Government Inspectorate, commercial banks including ACB and MB used money collected from the issuance of a number of corporate bond codes for purposes other than those stated in the issuance plan and information disclosure.

Specifically, during the inspection period, these banks issued 386 corporate bond codes (non-convertible bonds, no warrants, no collateral) with terms of 1-10 years, fixed or floating interest rates (floating interest rate = reference interest rate plus margin of 0.1-2.5%).

The purpose of issuance is to increase capital scale, supplement Tier 2 capital and other capital to serve customers, and serve the credit needs of banks. As of June 30, 2023, at the above banks, there are 173 corporate bond codes in circulation with a total value of VND 97,828 billion.

Many banks were inspected for using bond money for the wrong purposes (Photo: DT).

Many banks misuse bond money

The conclusion just announced by the Government Inspectorate shows that 3/5 credit institutions used money collected from the issuance of some bond codes for purposes other than those stated in the issuance plan and information disclosure.

Specifically, at ACB, this bank used the proceeds from the issuance of bonds coded TPACB2018/10Y (valued at VND 2,200 billion) and bonds coded ACB.2019.04 (valued at VND 1,500 billion) for medium-term and short-term loans, while the issuance purpose stated in ACB's issuance plan was "to serve the need for medium- and long-term credit".

At MB, this bank used the proceeds from 11 bond codes issued in 2022 with a total issuance value of VND 1,920 billion to make loans without making investments according to the issuance purpose stated in the pre-issuance information disclosures (which is "to supplement long-term Tier 2 capital according to the regulations of the State Bank, serving the needs of credit granting, investment as well as increasing the scale of the bank's operating capital to meet the business growth target in 2022 and the following years, in accordance with the provisions of law on credit institutions").

Failure to perform capital management responsibilities from bond issuance

The inspection conclusion also stated that the five banks did not fulfill their responsibility to manage capital from bond issuance as prescribed. These banks reported the use of proceeds from bond issuance for outstanding bonds as of December 31, 2022 and June 30, 2023, which were audited.

However, the above credit institutions cannot accurately determine the data on the use of proceeds from individual bonds for each loan and each specific customer. The reason is that all proceeds from bond issuance are not tracked separately but are mixed into the bank's general business capital to disburse to individuals and organizations that borrow capital.

Meanwhile, banking business activities are continuous and intertwined, so banks do not separately and specifically monitor each customer borrowing capital from the proceeds from bond issuance.

Non-compliance with regulations on bond issuance documents and information disclosure

In addition to misusing capital, many banks also do not comply with regulations on bond issuance documents.

According to the Government Inspectorate, the information disclosed by VIB and MB banks before the issuance of corporate bonds (period 2021-June 30, 2023) did not clearly state the time for disbursement of capital from corporate bond issuance.

Some banks do not even develop a plan for capital sources and capital use for the fiscal year for bond issuance in the period from 2016 to 2019.

In addition, the Government Inspectorate also concluded that banks did not comply with regulations on information disclosure of bond issuers, such as not timely disclosing periodic information reporting on the use of capital from bond issuance in the first 6 months of the year and the whole year.

Source: https://dantri.com.vn/kinh-doanh/thanh-tra-chinh-phu-nhieu-ngan-hang-vi-pham-khi-phat-hanh-trai-phieu-20251017181944330.htm