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Vietnamese banks withdraw deposits from foreign banks
The Vietnam Bank for Foreign Trade (Vietcombank) has withdrawn 40% of the money it deposited in banks in Europe and the US in order to protect its assets in the context of the global financial crisis. Vietcombank General Director Nguyen Phuoc Thanh confirmed this late last week. Other banks have followed the move.
Some financial experts believe that the financial crisis will not in any way affect Vietnamese banks. What do you think about that?
I don’t think the financial crisis will not affect Vietnam as Vietnam is a part of the world. However, the impact, I think, will not be big, because Vietnam has just opened its commodity market. Regarding capital flow, Vietnam will only see impacts in foreign investment. Foreign investments may decrease, while committed projects may go more slowly than previously scheduled.
Vietnamese banks still do not purchase foreign stocks, so they will not bear influence in this field. Domestic banks mostly make transactions with foreign commercial banks, while the financial crisis focuses on investment banks.
How can you be sure that no Vietnamese bank has purchased foreign stocks?
I know this for sure. Vietcombank leads in cooperating with foreign partners. If Vietcombank has not purchased subprime securities, the main reason behind the US crisis, other banks haven’t either.
To date, Vietnamese banks have just been cooperating with foreign partners in making deposits. In some cases, banks may purchase some kinds of safe valuable papers.
You have said that the financial crisis will not have big impacts on Vietnamese banks. Why have Vietcombank and some other banks withdrawn capital from foreign banks, then?
On October 3, the Prime Minister released a document asking banks to check their deposits at foreign banks. One week later, Vietcombank closed some of its accounts and took back mature deposits.
In fact, Vietnamese banks began checking their relations with foreign partners several months ago. Especially, we had to reconsider the places we made deposits when a lot of bad news began circulating: the US Lehman Brothers and Merril Lynch began experiencing problems, and then even ‘hermaphrodite’ banks (both investment and commercial) also collapsed.
The news made us understand that big banks do not mean safe banks. We cannot say for sure if the banks where we deposited money have any relations with the collapsed banks. Therefore, we decided to withdraw money to ensure the safety of our money.
In the last 3-4 days, countries in the world have shown their determination in settling the crisis, which has made the situation brighter. As we feel that the situation has become better, we have halted the money withdrawal.
How much money has Vietcombank taken back?
I cannot reveal the exact figure, but I can say that the withdrawn sum of money is equal to 40% of the total sum deposited by Vietcombank at foreign banks. We have deposited the money at the State Bank of Vietnam and we are considering depositing the sums of money elsewhere again.
There has been a rumour that Vietcombank is in danger of losing all the money it deposited at foreign banks. What would you say about that?
I can say that we have incurred no losses. Vietcombank reported on its deposits to the Prime Minister one month ago. We could withdraw all the money from foreign banks to prove that we are safe, but it is not necessary and unreasonable. If we had lost money, the government would have rapped on our heads with its knuckles.
As far as I know, Vietcombank plans to develop into a multifunctional group, while considering investment banking activities. Will the collapse of investment banks change Vietcombank’s plan?
We will have two main business fields, investment and retail banking. As inflation has been high, we have halted providing consumer credit, while trying to develop card services. As for investments, not all investment deals will fail. It is necessary to clarify the reason behind the collapse of foreign investment banks. The US investment banks collapsed because of subprime loans.
VNN
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