Vietnam’s central bank held emergency meetings this week with commercial banks to discuss liquidity in the system, two informed sources told Reuters on Friday (Nov 4), as lenders face pressure from tightening credit conditions and higher interest rates.

One of the sources with knowledge of the issue, who asked to remain anonymous because the information was confidential, said that the State Bank of Vietnam (SBV) has held three meetings with more than a dozen banks this week, to address “difficulties” for some lenders to access sufficient liquidity and about deposits in the system.

The SBV did not immediately respond to a request for comment on the meetings.

Pressure is building amid an anti-corruption crackdown which hit Vietnam’s property sector and froze the debt market that was driving the housing market.

The two sources said that discussions with banks focused on liquidity, with one of them stressing that talks also addressed the level of corporate bonds that lenders hold in their books.

The market for corporate bonds is being closely watched by investors as 375 trillion dong (US$15 billion) in property debt matures by 2025, according to the National Assembly’s economic committee, and authorities have put restrictions on refinancing it.

Corporate bonds worth billions of dong have been redeemed in recent weeks after the arrest last month of property tycoon Truong My Lan, the chairwoman of Ho Chi Minh City-based developer Van Thinh Phat Holdings Group, over suspected bond-market fraud. Lan has made no public comment on the allegation.

That also followed a tightening in September of the rules on private placing of corporate bonds.

In turn, the scramble for funds has contributed to a decline in the stock market and has driven the dong down 6 per cent in three months.

Source: Reuters