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Banks thirsty for capital
Joint-stock banks have been following each other to raise deposit interest rates sharply since mid June, a move which has been explained as indicating they are short of capital.
Deposit interest rates have been raised continuously every week. However, banks recently have focused on adjusting interest rates on short-term deposits (less than 12-month term deposits).
Right in the first week of June, 6-month term deposit’s interest rates were raised by joint-stock banks to over 8 percent, while the previous rate was just 7-7.5 percent. In late June, some banks also raised the interest rate for 3-month term deposit to over 8 percent.
Dai A Bank is now leading the banks as it is offering the highest deposit interest rates for short-term deposits. The bank offers 8.6 percent for 6-month term deposits. Four other banks are now applying the rates of 8.5-8.55 percent, while Lien Viet Bank is now offering 8.1 percent.
What is happening now may recall the liquidity crisis which occurred in the second and third quarters of 2008, when commercial banks rushed to raise interest rates, offering higher interest rates for shorter-term loans, not long-term loans. Meanwhile, in a stable monetary market, interest rates for long-term deposits are always higher than those for short-term deposits.
Cao Sy Kiem, Member of the National Advisory Council for Monetary Policy, in a recent interview given to a local newspaper, said that the only thing that forces banks into this behaviour is that they lack capital.
The story about the lack of capital of commercial banks has been bolstered by the rumour about the marketing activities of Standard Chartered Bank. The story is that as stock prices have been decreasing, a lot of investors have withdrawn money from their accounts. Standard Chartered Bank has asked brokers at securities companies to persuade investors who have withdrawn capital from accounts to deposit at the bank.
General Director of Standard Chartered Bank Ashok Sud has denied the information. However, he said that every bank has its own way of accessing clients, and it would not be surprising if banks sent staffs to persuade clients and give advice on cash management.
The general director said that the raising of interest rates for short-term deposits of joint-stock banks is just taking place on a small scale, depending on the liquidity of banks, while it does not reflect the overall picture of the whole banking system.
General Director of Lien Viet Bank Nguyen Duc Huong said that banks are pushing up loaning and there are signs of capital shortage.
Huong said that the demand for working capital to serve production and short-term investments is increasing sharply, while it is now not easy to mobilise capital.
In the first six months of the year, the capital mobilised by the banking system just increased by 16.2 percent, while the loans have increased by 17 percent. At many banks, the credit growth rate has reached some 50 percent, which is much higher than the mobilised capital growth rate.
VietNamNet, VNE
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