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Interest rates becoming chaotic, central bank orders to stop “interest rate war”
Just several days ago, when some banks offered the sky high deposit interest rate of 14 percent per annum, people thought that this would be the peak. However, they were wrong: Interest rates have climbed to 17 and then 18 percent. Meanwhile, the State Bank of Vietnam believes that the current interest rates are unreasonably high and has requested commercial banks to apply “reasonable interest rates”.
In fact, the interest rate war has been fought for several months already. However, a breakthrough was only made when Techcombank, a large joint-stock bank, unexpectedly announced a promotion program, under which depositors can enjoy an interest rate of more than 17 percent.
Following the move, SeABank, which has always been leading in the interest rate war, once again surprised people by offering a higher interest rate of 18 percent for deposits.
However, the new interest rate offered by SeABank would only exist for a short time. Four hours after the new interest rate was announced, the bank had to slash it to 14 percent.
Meanwhile, according to VnExpress, by late afternoon of December 8 Techcombank had not released any announcement about interest rate adjustments, even though the central bank had requested commercial banks to offer “reasonable interest rates”.
Commercial banks are angry and criticize Techcombank for triggering a new nd more serious interest rate war.
An official from the State Bank of Vietnam also said: “It is Techcombank which ignited the interest rate war, prompting other commercial banks to raise the deposit interest rates to over 17 percent”.
“Techcombank says it needs to raise deposit interest rates in order to attract more capital. But we are sure that Techcombank does not have any difficulties in capital sources to have to mobilize capital at such high interest rates,” the official continued.
A senior executive of a state-owned bank complained that he has become too busy answering calls from the bank’s branches asking about the interest rate policy. “The branches complained that people are trying to withdraw money from the bank and deposit at other banks to enjoy higher interest rates,” he said. “The branches ask me to raise deposit interest rates in order to retain depositors. I do not have time for meals”.
The branch of a state-owned bank located on Thai Thinh street in Hanoi was very crowded yesterday, but officers were not happy. An officer here said most of the clients came to withdraw money. Especially, a client withdrew five billion dong from the bank branch late yesterday afternoon.
Le Duc Tho, Deputy General Director of Vietinbank, a large state-owned bank, though affirming that the bank’s capital is still profuse, said that if the capital continues flowing out of the bank to other banks, “we will have to take necessary measures to retain clients”.
However, he believes that if banks pay 17 percent or more per annum for deposits, they will not be able to generate profit and will face high risks.
Nguyen Thanh Toai, Deputy General Director of Asia Commercial Bank, also thinks that the move by some banks to raise the deposit interest rate to over 17 percent is a “dangerous move”.
The State Bank of Vietnam has to take actions to intervene in the market. An urgent meeting was gathered in the afternoon of December 8, where the bank asked commercial banks to adjust the interest rates and offer “reasonable interest rates”. The representative from the central bank affirmed that banks have raised deposit interest rates not because of the capital shortage.
As Tet nears, the overly high interest rates applied by banks have pushed many businesses against the wall. Representative from a wooden furniture enterprise in HCM City said that last month, he had to borrow money at 15 percent per annum. Meanwhile, the lending interest rate has jumped to 16-19 percent which has become unbearable.
Dr. Tran Hoang Ngan, Deputy President of the HCM City Economics University also believes that the current interest rates are abnormally high. He said reasonable deposit interest rates are 13-14 percent per annum, while reasonable lending interest rates are 16-17 percent.
vietnamnet
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