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UPDATE 1-Vietnam banks cut loans for shares as market drops

Fri May 30, 2008 7:12am EDT

(Adds details, stock market performance)

HANOI, May 30 (Reuters) - Vietnamese banks cut their lending for securities investment to 9.75 trillion dong ($606 million) last month, the central bank's governor said on Friday, down 14.5 percent from the end of 2007.

Bank loans in April for securities investment accounted for only 0.78 percent of Vietnam's outstanding loans at the end of April, State Bank of Vietnam Governor Nguyen Van Giau told a televised National Assembly session.

Loans for securities investment totalled 11.4 trillion dong in December 2007, or 1.37 percent of total bank loans, according to central bank figures.

Fitch Ratings said on Thursday that Vietnamese banks face challenges from sharply higher interest rates and tightening liquidity, especially those which lent imprudently to property developers and stock market investors.

The Ho Chi Minh Stock Exchange .VNI, which has fallen eevry trading session this month, lost 1.52 percent on Friday to close at 414.10 points.

The market has lost 55.3 percent so far this year after a gain of 23 percent in all of 2007 when investors poured in, attracted by Vietnam's potential as the newest member of the World Trade Organisation and its 8 percent annual GDP growth.

($1=16,086 dong) (Reporting by Ho Binh Minh; Editing by David Cowell)



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