REVIEW
of
FINANCE -
Apr. 2018
29
Secondly,
it is necessary to further promote
international standards’ application to create a
safe working environment for securitization such
as IFRS and Basel.
- The full application of IFRS will open up a
new era of change in how financial statements
recognized, measured and presented, and
eliminated differences in the standard. IFRS’s
implementation is considered a challenge to
the level of market development, qualifications
and capabilities of auditors, accountants and
investors in the market. For the stock market, the
preparation and presentation of IFRS financial
statements will help to improve the openness,
transparency and sustainability. However, the
converting of financial statements from VAS to
IFRS in Vietnam requires a much effort from
businesses and people working in finance and
accounting, and most importantly, requires very
strong orientation from government’s policy to
promote this process.
- In addition, early adoption and progress
towards higher Basel standards should also be a
target for the banking system in Vietnam. In the
short-term, the application of Basel II should have
completed soon.
Thirdly,
the government should ease the
establishing of reliable credit rating agencies
Securitization transactions can be very complex;
many investors do not have enough time or
necessary skills and reliable experience to
adequately assess the structure of a transaction.
Therefore, the financial market should have not
one but two credit rating agencies who take part in
the rating securitizationproducts. The credit rating
of a these securitization can figure or influence
the level of capital that an investor needs to hold
in proportion to the amount of securities that they
invest. Therefore, it is necessary to establish the
mechanism which debt securities classification
companies have to share responsibility for the
classification of debt securities that do not match
the level of risk of securitized assets when risks
arise. In most countries, usually they have three
international ratingagencies providing securitized
debt rating services. These are Moody’s, Standard
& Poor’s and Fitch. These companies together
dominate global securitization. In North America,
DBRS (Dominion Bond Rating Service) also plays
an increasingly important role. For local rating
agencies, it is important to ensure that they have
the skills they need to analyze properly and to
give accurate ratings.
In summary, securitization is a necessary
funding channel for Vietnam’s financial market,
not only from the needs and requirements
of international economic integration, but
also from the need to raise capital besides the
traditional method, and the need for financial
product diversification, transparency in the
stock market. However, apart from DATC and
VAMC are models with some similarities to
SPV, there is almost no other application for
this financial instrument today in Vietnam.
Therefore, to apply this type of asset to the stock
market, Vietnam needs to build a roadmap,
from the consolidation of macro factors such as
financial security, the legal mechanism, to micro
factors such as information transparency of all
enterprises operating on the stock exchange.
References:
1. Dang Van Dan (2016), “Securitization of real estate mortgaged loans: A
Look at Benefits and Development in Vietnam”, Ho Chi Minh University
of Banking;
2. Jobst (2002), “Collateralised Loan Obligations (CLOs) -A Primer”, Center
for Financial Studies, Working Paper, December 2002;
3. Le Thi Hoang Lan (2015), “Solutions to improve the use of structured
finance products in the process of dealing with commercial bank bad
debts”;
4. Le Thi Thuy Van (2017), “Dealing with Bad Debts in Vietnam: Current
situation and problems”, Information for Leaders, National Institute for
Finance, June 2017;
5. Le Thi Thuy Van and Vuong Duy Lam (2015), “VAMC and dealing with
bad debts: Issues and policy recommendations”. Vietnam Finance Books
2014;
6. Le Vinh Trien & Nguyen Huynh Nhi (2012). “Model securitization of real
estate secured loans”;
7. Nguyen Duong (2003), “Securities securitization - tools to raise capital”,
Vietnam Investment Review, Issue 196;
8. OECD (1995), “Glossary of statistical terms - Securization”, Financial
statistics, November 22
nd
, 1995;
9. Tran Quoc Tuan (2007), “Securitization of real estate investments to
create commodities for the Vietnamese securities market”, Committee
level Scientific research topic;
10. Le Thi Hoang Lan, PhD. (2016), Solutions to improve the use of
structured financial products in dealing with commercial bank bad
debts.
