VietNamNet Bridge – A new wave of big investors withdrawing capital from securities companies has been noted. Securities companies turn out to be not the geese that lay golden eggs as they previously thought.

Giving up the games

The Cho Lon Securities Company has officially announced the dissolution. This is the first securities company that makes such a statement after a 7-year operation.

One month before, the shareholders’ meeting of the Au Viet Securities Company agreed in principle to the plan to dissolve the company. The money would be divided to shareholders -- which is expected to last until the end of 2013.

Au Viet began scaling down its business in mid-2012. It has cut down the labor force and stopped transactions on both the listed and UpCom markets. Cho Lon has also been following similar steps over the last year, preparing for a complete dissolution.

While Cho Lon and Au Viet have made public about their dissolution, other securities companies have left the market quietly. Lien Viet, for example, has abandoned the membership status at both the Hanoi and HCM City bourses, and transferred its customers to the Kim Long Securities Company.

Meanwhile, sources have said a series of decisions on ending the operation of many securities companies would be made in the time to come.

The State Securities Commission (SSC) is considering revoking the operation licenses from 3 companies – Truong Son, Hanoi and Delta. This is the foreseeable ending for all the 3 companies which nearly did not have any operation over the last year. Nothing more can be done to rescue them which cannot fix the finance safety problems after six months of operation suspension.

In mid-April 2013, SSC made a decision to suspend the operation of Trang An Securities Company for 6 months before the company cannot meet the safety ratio requirements.

Trang An will not be able to open new transaction accounts or extend the contracts relating to some specific operations. Analysts believe that the operation suspension could be the final step taken by SSC before the watchdog agency forces the company to stop operation.

Running away as soon as possible

Many other securities companies have not received the punishment from SSC, but they are in fact at the point of death already.

Sources have said that about 10 securities companies have been put under the special control. Many others have received warnings from SSC for taking loss or violating the current regulations.

VIG proves to be the only lucky company which has escaped from the special control. SSC’s report showed that VIG has successfully improved the finance situation after collecting debts, cutting some operations and restructuring the investment portfolios.

However, VIG is still facing high risks with the modest turnover of VND3.1 billion in the first quarter of 2013, while its capital is VND340 billion. The securities companies took loss in the last two consecutive years of VND96 billion in 2011 and VND63 billion in 2012.

A lot of securities companies reportedly have to narrow the operation, close down branches, cut down the labor force, and reduce the salaries for the management board and staff. Some of them have reportedly taken loss for the last 5-6 years. However, it is surprising enough that they do not intend to dissolve.

Huan Tu