Some banks report excess usable capital
The State Bank of Vietnam (SBV) has denied the rumour that SBV is going to put some joint stock banks under special supervision, saying that the liquidity of banks is still good, while some banks have even reported excesses of usable capital.
New interest rate spectrum: 17.5-18% per annum
The report released by SBV late last week showed that some banks still have not made compulsory reserve for June 2008. The State Bank continues offering to purchase valuable papers (VND6-15,000tril per session) on the open market. Meanwhile, small banks, which have just changed their mode of operation, have been recapitalised to ensure liquidity.
The interbank market’s interest rate remains stable at 18% for one-month term loans, while there are no transactions for more than one-month term loans.
Commercial interest rates have been stabilised with a new interest rate spectrum set up at 17.5-18% per annum. SeABank had set the very high interest rate of 19.2%, but it has stopped the programme to mobilise capital with that interest rate.
Le Xuan Nghia, Director of the Banking Development Strategy Department under SBV, said that a lot of banks have raised deposit interest rates to high levels because they consider the task of ensuring liquidity a top priority, while making profit is just the second-most important task. However, he said, this is just a short-term exchange.
Regarding the rumour, a representative of a joint stock bank said that this was an unfounded rumour. He said that he has received a lot of calls these days to ask about the bank’s liquidity, while its operations are normal and the indices of the bank are all under the safety line.
“We have shifted from a rural bank to an urban bank, therefore, we need to compete with rivals by offering interest rates, and that has triggered the rumour about the weak liquidity of the bank,” he said.
Banks’ shut doors on borrowers
Nguyen Van Toan in Tan Phu district in HCM City said that he needs to borrow VND100mil to repair his house, but banks all have refused to give loans, saying that they still need to reconsider the lending interest rate, while the maximum lending interest rate has increased to the new level of 21%.
Not only small banks, bigger joint stock banks also have stopped providing loans to individual clients. Do Minh Toan, Deputy General Director of ACB, said that the bank prioritises giving loans to fund business and production, while limiting consumer credit.
The General Director of a joint stock bank admitted that the bank’s credit growth rate has surpassed 30%; therefore, the bank is now only supervising the loans and trying to recover capital as soon as possible.
Meanwhile, the director of an enameled tile company said that his company has finished the construction of its second plant which has a capacity double the first one. However, the second plant is just operating perfunctorily as the company needs to reconsider the capital arrangement. He said that the highest possible profitability is 25% per annum. If he has to borrow money at 21% per annum and pay for amortisation, the company will not be able to pay the dividends of 20-30% per annum as it has promised shareholders.
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