Doors to bank credit remain closed, developers complain

In a meeting hosted by the Ministry of Construction and joined by bank representatives on November 13, leaders of Vinhomes, Novaland, Hung Thinh Group and other property developers stated their dissatisfaction with banks due to a large number of unresolved credit issues.

Vinhomes chairman Pham Thieu Hoa said that one of the biggest problems the company is facing is that banks do not accept stocks, equipment or asset rights as collateral.

They also tend to undervalue property collateral, he said, adding that property developers still have to pay high interests for loans as banks remain skeptical in giving funds to the property sector.

Only companies that are willing to bear high interest rates can borrow, he added.

Nguyen Quoc Hiep, chairman of apartment building developer GPInvest, said that banks should bring down their interest rates and reduce the amount of paperwork required in reviewing loan applications.

Nguyen Van Cuong, deputy chairman of Hung Thinh Group, a developer of residential and resort projects in the south, said that the government should lift credit growth caps for banks that are giving property developers loans.

Banks should simplify the loan review and approval process and should also give loans to construction material suppliers and construction firms to speed up project development, he added.

Banks, however, said that they are not the cause of the problems.

Nguyen Duc Vinh, CEO of VPBank, said that lenders are now "afraid" to give the sector more loans.

"Property developers should look at themselves to see if they are really healthy. Many of them have bought many projects earlier but are not willing to sell them now as they fear loss," he said.

The recent crisis in the property sector, which is partly caused by a decline of confidence in bonds, has caused interest rates to surge.

"We lent a property developer money for a project but the company just kept it idle for three years. Property developers need the government to untangle legal knots so they can get permits to develop their projects," Vinh added.

Responding to requests to simplify loan approvals, Pham Nhu Anh, CEO of MB, said that banks need to comply with regulations in reviewing loan applications, and banks can help speed up the process by giving them all the positive and negative information about the projects they are working on.

"Developers often show us their best information on themselves, but we often have to dig deep for the negative facts. We need to cooperate to speed up the process."

Pham Quang Dung, CEO of Vietcombank, said that interest rates have dropped in recent months and banks are looking for borrowers, especially healthy businesses, but many property developers have a high bad debt ratio.

Deputy CEO of Techcombank Phung Quang Hung and VPBank CEO Vinh proposed that the government reduce the risk weight of the property sector, which is currently at 200%, to help it recover.