Put all your eggs in one basket.

- Following the recent shareholders' meetings, many banks have stepped up their capital contributions and increased their ownership stakes in securities companies. Not content with being major shareholders, banks are even aggressively buying more shares to gain a controlling stake or 100% ownership of securities companies.

Why was this move made?

- Traditional lending activities of commercial banks are facing increasing competitive pressure. Banks are forced to meet credit growth limits, while profit margins are shrinking. Meanwhile, securities brokerage and capital markets offer much more lucrative profit margins. In fact, banks with their own securities companies have achieved impressive profit levels recently.

- Every coin has two sides. Profit is obvious. But what risks might closely link a bank's brand with a securities company create?

- Banks' calculations when expanding into the securities market are aimed at increasing income from service fees. More importantly, they will effectively leverage their customer network. The bank's financial ecosystem will become more extensive to exploit long-term profits. On the other hand, banks and securities companies will focus heavily on large clients. This is the risk. When large clients withdraw money en masse, the bank will be hurt because all its eggs are in one basket.

TU QUEO

Source: https://www.sggp.org.vn/trung-don-mot-gio-post806533.html