Weekly Information on Banking Activities (April 16 - 22, 2009)

1. The money market was stable. The mobilizing interest rates in VND and USD remained stable as compared to those in the previous week.

The rates are quoted by April 23, 2009 as follows:

- The mobilizing interest rates in USD offered by the Vietnam International Joint- Stock Commercial Bank (VIBank) and the Vietnam Technological and Commercial Joint-Stock Bank (Techcombank) reduced by 0.1-0.2 percentage point p.a. in most time loans.

- The lending interest rates were also stable as compared to those in the previous week. The lending rates in VND of the group of state- owned commercial banks were commonly at 8.5% -10% p.a  for short – term loans, and at 10% -10.5% p.a. for the medium and long-term loans. The lending rates in USD ranged from 6% to 7% p.a. The negotiable lending rates of the personal and credit card loans were commonly at 12%-15% p.a.

2. According to the express reports of credit institutions, by April 21, 2009, the average interest rates in VND in the inter-bank market tended to decrease slightly for the short terms (overnight, 1 week and 2 weeks), the average interest rates for other terms (1 month, 3 months, 6 months and 12 months) tended to increase slightly in comparison with the previous week, particularly the 12 month term rate remarkably increased by 0.4 percentage point p.a, and the rate for 1 month term rose slightly by 0.03 percentage point p.a.  The overnight rate is 6.13% p.a., the other rates ranged between 7%-8.4% p.a

The average interest rates in USD were on a downward trend for most time loans, while the overnight rate increased slightly by 0.02 percentage point p.a. The highest rate was 3.29% p.a. for 6 month loans and the other rates ranged between 0.4%-1.6% p.a. There were no transactions for 12 month loans.

The average interest rates in the inter-bank market were as follows (% p.a):

3.During the week, commercial banks quoted the selling USD/VND exchange rate closely to the ceiling rate set by the SBV, commonly at 17,783-17,788.

There were illegal foreign currency transactions conducted by certain institutions and individuals through foreign exchange agents. Several enterprises advertised and quoted commodity price and service fees in foreign currencies. In order to enhance oversight of the above-mentioned illegal activities, the Governor of the State Bank of Vietnam (SBV), on April 22, on the basis of the existing regulations on foreign exchange operations, issued documents requesting the relevant authorities to coordinate with the SBV to deal with the aforesaid problems. At the same time, the SBV also instructed credit institutions and the SBV branches to strictly enhance oversight of these operations. Following are the documents issued by the SBV Governor:     

- Official Letter No. 2882/NHNN-QLNH and Official Letter No. 2881/NHNN-QLNH requesting the Ministry of Public Security, the Ministry of Industry and Trade, and the People’s Committees of provinces and those cities under the central government to instruct their specialized entities to enhance oversight of advertisements and quotation of commodity price and service fees in foreign currencies, and illegal foreign exchange trading of individuals and corporate so as to deal with all cases of violations in compliance with  the existing regulations.

- Official Letter No. 2878/NHNN-QLNH requesting the Ideological and Educational Commission of the Central Committee of the Communist Party of Vietnam and the Ministry of Information and Communications (MIC) to instruct the mass media   only to carry or broadcast advertisements related to foreign currencies of the licensed institutions and individuals in Vietnam. The SBV also requested the Ideological and Educational Commission of the Central Committee of the Communist Party of Vietnam and the MIC to ban the publication by the mass media of the foreign exchange rates in the parallel market.

- Official Letter No. 2880/NHNN-QLNH instructing the municipal and provincial SBV branches to coordinate with the relevant authorities in their locations to deal with all the cases of violations of the foreign exchange agents stipulated in Decision No. 21/2008/ QĐ-NHNN, and of the regulations on advertising and quoting commodity price and service fees in foreign currencies.

- Official Letter No. 2879/NHNN-QLNH instructing the credit institutions with foreign exchange license to strictly monitor the operations of their foreign exchange agents as follow:

+ To monitor and guide all the foreign exchange agents to strictly comply with the existing regulations on foreign exchange operations;

+ To enhance oversight of operations of foreign exchange agents. The credit institutions should strictly deal with all the cases of violations of the agent contracts or the foreign exchange agent regulations issued together with Decision No 21/2008/QĐ-NHNN and report all the violation cases to the SBV branches in their locations.

+ Based on the nature and intensity of violations by the foreign exchange agents, the SBV will take proper sanctions, including restriction of certain operational aspects of the licensed credit institutions.

4. SBV Management Board’s activities

- The Governor had a meeting with the People’s Committee  of Thanh Hoa Province on April 17 with the aim of reviewing the implementation of Resolution No.30/2008/NQ-CP of the Government dated December 11, 2008 on urgent measures of preventing economic decline, maintaining growth rate and secure social protection.

- The Governor and Ms. Vicitoria Kwakwa, Country Director of the World Bank (WB) in Vietnam, signed the Financial Sector Modernization and Information Management System Project (FSMIMS) funded by the WB and the Japanese Government in Hanoi on April 24.

- The Governor chaired a meeting to review the SBV’s performance in the first quarter of 2009 at the SBV Head Office in Hanoi on April 22.

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