Local commercial banks have seen mobilization slumping over the past week after applying the ceiling deposit rate of 14% per annum as regulated by the State Bank of Vietnam.
Local commercial banks have seen mobilization slumping over the past week after applying the ceiling deposit rate of 14% per annum as regulated by the State Bank of Vietnam.
Speaking at a conference held by the central bank’s Hanoi branch on Thursday, Han Ngoc Vu, chairman of Vietnam International Commercial Bank, said customers withdrew nearly VND1 trillion after the regulation took effect on September 8. The banking system cannot stand it if the move keeps going on, Vu was quoted by the online newspaper Vnexpress as saying.
For Southern Commercial Bank, customers also took back around VND200 billion, said its deputy director Phan Cong Khoa, while Vietnam Bank for Agriculture and Rural Development (Agribank), the biggest lender in Vietnam in terms of assets and network, saw hundreds of billions of dong running out last week.
Tran Phuong Binh, general director of DongA Commercial Bank, said its mobilization has dropped by over VND20 billion each day.
“Most customers have been familiar with high deposit rates, so they take money back to buy stocks, gold or real estate as deposit rates are not attractive anymore,” Binh told the Daily on Thursday.
The general director of a HCMC-based commercial bank also said that VND250 billion was withdrawn from his bank in one week alone, saying that the lender will suffer poor liquidity if the situation keeps on. Lending rates on the inter-bank market are higher than 14% while the central bank only pumps limited capital via open market operations, he added.
Bankers do not know where the money has run.
Andy Ho, managing director of VinaCapital, said the capital flow might have run into stock markets as liquidity has surged strongly on the equity markets in recent days. Trading value on the two exchanges has shot up to over VND2 trillion daily compared to previous levels of VND600-700 billion.
If liquidity keeps rising on the market for a while, capital flow thing will run into property channels.
“It is good to invest in stocks or real estate but it is risky for investors to buy U.S. dollars,” Ho said.
The greenback has inched up to nearly VND21,000 on the unofficial market over the past few days while it is around VND20,834 in banks. People might have bought dollars but the central bank has sold out the greenback to stabilize the forex rate.
Given falling mobilization, many banks are afraid that the 14% ceiling deposit rate will be lifted again if the central bank does not pump in more funds. However, the central bank cannot put in much capital this year as money supply is limited at 15-16%, making the ceiling rate of 14% a big challenge to the managing body.
(Source: VN+)
