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Monthly Information on Banking Activities (January, 2009)
I- State Bank of Vietnam (SBV) activities
1. Issuance of legal documents
The SBV Governor issued on January 23, 2009 Circular No. 01/2009/TT-NHNN to provide guidelines on negotiable interest rate mechanism applicable to credit institutions for consumer and credit card loans.
2. Management of credit and monetary policies
In order to implement Resolution No 30/2008/NQ-CP of the Government dated December 11, 2008 on urgent measures to promote business, production and goods distribution, to actively prevent the economic downturn, to stabilize economic growth, and to secure social protection, the SBV carried out the following important tasks :
+ Promulgating Instruction No.06/2008/CT-NHNN to urge credit institutions to (i) proactively solve the negative impact of the global financial crisis; (ii) take consistent measures for strengthening capital mobilization, conducting effective credit operations, offering reasonable lending interest rates to those enterprises and households in face of production and business difficulties; (iii) reschedule loans, to exempt or reduce lending interest rates in accordance with the applicable regulations; (iv) continue adjusting credit structure to meet the capital demand of priority customers of production, export and import of essential commodities, rural and agricultural development, small and medium enterprises (SMEs), and effective projects; and (v) strengthen internal control and audit, and risk management.
+ Completing without delay the action plan to implement Resolution No.30/2008/NQ-CP and Resolution No. 01/2009/NQ-CP of the Prime Minister on key measures of the socio-economic development plan and state budgeting for 2009.
+ Reducing the base interest rate to 7% p.a from 8.5% p.a, aimed at bringing the maximum lending rate down to 10.5% p.a.; lowering the interest rate of VND-denominated reserve requirement of credit institutions to 3.6% p.a from 8.5% p.a.; and promulgating decision on guiding credit institutions to implement negotiable interest rate mechanism in line with the directives of the National Assembly and the instructions of the Prime Minister.
- Closely monitoring the money market and performance of credit institutions and taking timely supportive measures on the occasion of the Lunar New Year of the Buffalo such as (i) conducting purchase of valuable papers through OMOs from January 21, 2009 with 2 sessions per day valuing up to VND 5,000 – 6,000 billion ; (ii) continuing to allow commercial banks to get prepayment for their SBV compulsory bills ; (iii) selling foreign currencies to credit institutions so as to meet the foreign exchange demand of the economy ; (iv) meeting timely and adequate cash demand in terms of both value and denomination structure; and (v) ensuring stable, safe and accurate operations of the payment systems.
- Establishing the Inter-Ministry Working Team to study operations of the Gold Trading Center in order to design the model and management regulations of this center in line with the practical situation of Vietnam.
- Requiring the Vietnam Bank for Social Policies to simplify the lending and repayment procedures for those poor households eligible for concessional housing credit in line with Decision No. 167/2008/QĐ-TTg.
3. Ensuring safe and sound development of commercial banks
SBV decisively instructed those commercial banks with charter capital below VND 1 trillion to accelerate their plans to increase charter capital up to the minimum level of VND 1 trillion by December 31, 2008. Up to now, most commercial banks have increased charter capital as planned and the remaining 5 banks have deposited adequate money in their accounts with SBV and are in the process of completing the administrative procedures to register their new charter capitals.
In order to meet the December 31, 2010 deadline of VND 3 trillion charter capital for all the joint-stock commercial banks, SBV will require commercial banks to work out the detailed recapitalization plans to meet this requirement. SBV will report those difficult cases to the Government for guidance.
Continuing the equitization plan of Vietcombank, SBV has permited Vietcombank to list its shares in the Ho Chi Minh City Stock Exchange and sell shares to three foreign investors.
4. Accelerating the fight against banking crimes
- Stricly imlementing the instruction of the 138/CP Steering Commitee , SBV required all the institutions of the banking sector to (i) accelerate carrying out the National Program against banking crimes; and (ii) closely cooperate with the relevant authorities in their locations to combat lootings at transactions counters and ATM premises.
- SBV submitted to the Government a proposal to establish the Steering Committee for anti-money laundering and anti-terrorist financing and the working regulations of this Committee for approval.
II. Credit and monetary performance
1. Interest rate:
- VND interest rates: The mobilizing rates in VND reduced by 0.2% - 1.5% p.a., the lending rates in VND reduced by 3.5% - 4% p.a., while the lending rate declined by 0.5%-1.2% p.a. as compared to the previous month. The common mobilizing rates ranged from 6.99% to 7.84% p.a., and the lending rates offered by commercial banks at 10.82% to 11.52% p.a.. However, several state-owned commercial banks applied the minimum rates of 6.5% p.a. for their priority customers.
- USD interest rate: the average mobilizing rate reduced by 0.5%-1.2% p.a. whilst the lending rate reduced by 0.1-0.5% p.a. as compared to the previous month. As a result, the mobilizing rates were between 2.35%-3.55% p.a. and 6.61% p.a. for short term loans and 7.6% p.a. for medium and long term loans.
2. Despite complex movements in international markets, the demand and supply of foreign currencies moved in a positive trend. As of January 30, the US$/VND average exchange rate in the inter-bank market was 16,978 VND. Commercial banks quoted their exchange rates close to the ceiling rate prescribed by SBV. In the parallel market, the rate was always higher than the rates of commercial banks by 150-216 VND.
The VND/EUR continued to change close to the fluctuation of the Euro in international markets. As January 30, the VND/EUR rate was quoted by commercial banks at 22,424-22,844 VND/EUR, 8.32% lower than that of last month. The rates in the parallel market were close to those of commercial banks.
3. The total liquidity of January was estimated to be up by 1.57% in comparison with the previous month, lower than the rate of 7.98% of December, 2008.
4. The total deposit outstanding of customers with credit institutions in January was estimated to be up by 0.18% against the previous month, of which the VND-denominated deposit outstanding was estimated to be lower by 0.47% and the foreign exchange deposit outstanding up by 2.3%.
5. The loan outstanding to the economy in January was up by about 0.52% against the previous month, of which the VND deposit outstanding up by about 0.17% and the foreign exchange deposit outstanding up by about 1.91%.
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