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Archive for the ‘Vietnam Banking Finance’ Category

Central bank cuts foreign-currency reserve ratio for banks

In Vietnam Banking Finance on January 19, 2010 at 2:48 pm

The State Bank of Vietnam announced January 18 a reduction in banks’ foreign-currency reserve ratio with effect from February.

The reserve rate for sight deposits and those below 12 months will be reduced to 4 percent from 7 percent for all State-owned banks except the Bank for Agriculture and Rural Development (Agribank), joint-stock banks, and foreign banks.

For Agribank, central people’s credit funds, and cooperative banks, it will be halved to 3 percent.

For deposits of above 12 months, it will be 2 percent and 1 percent for the two categories of lenders.

The cut in the reserve ratio is expected to help the banks meet the market demand for foreign exchange.

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ACB bank reports better-than-expected gross profit

In Vietnam Banking Finance on January 18, 2010 at 2:59 pm

Customers at an ACB unit

Asia Commercial Bank said it posted 2009 pre-tax profit at almost VND2.82 trillion (about US$153 million), VND118 billion higher than the year target.

The Ho Chi Minh City-based banking group said in a statement issued Jan. 14 that one-fifth of the profit came from credits, a quarter from shares, equities and valuable papers, another quarter from investment and money business, and the balance from other activities.

ACB said lending soared by 81 percent in the end of last year, compared with the beginning of the year. The bank also reported bad debts at only 0.41 percent.

The banking group said its total assets reached VND171.95 trillion, increasing by 63 percent from 2008.

Last year, ACB was picked as the best bank of Vietnam 2009 by six banking magazines namely Asiamoney, FinanceAsia, Euromoney, Global Finance, The Asset, and The Banker.

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Banks should be prohibited from involvement in securities activities: economists

In Vietnam Banking Finance on January 16, 2010 at 3:08 pm

Commercial banks shouldn’t be allowed to provide loans to securities businesses and invest in stocks, said economists at a seminar on the Bill on Credit Organizations held by the National Assembly Economy Committee on January 15.

They said it is not the bank’s function, and is risky and unsafe for the credit organization system.

The prohibition is to ensure that banks are responsible for depositors, they added.

Investment banks and commercial banks should be fixed clearly since some investment banks have been established from securities firms in Vietnam.

However, commercial banks objected to the prohibition, saying that they should be limited, but not prohibited, in providing loans to stock businesses.

On the same day, at a conference on Vietnamese banks after the global crisis held by the Vietnam Chamber of Commerce and Industry’s branch in Ho Chi Minh City, Dr. Le Dang Doanh said local banks need to enhance their administrative abilities and healthy competitiveness.

Ly Xuan Hai, general director of Asia Commercial Bank, said the bank system has to be “thin” without many levels of management so it can operate quickly and consistently.

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Central bank calls halt to gold-trading loans

In Vietnam Banking Finance on January 13, 2010 at 8:37 am

Investors trade gold at a gold exchange.

The State Bank of Vietnam ordered commercial banks January 11 to stop lending to investors in gold trading floors and recall loans given to them.

It has instructed its branches in cities and provinces to monitor implementation of the order and penalize banks not following the instruction.

The central bank has ordered the closure of gold exchanges by March 30 this year.

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Vietcombank set to reissue its debit cards

In Vietnam Banking Finance on January 11, 2010 at 5:56 am

Vietcombank will cancel and reissue its Connect24 debit cards in line with a plan by the State Bank of Vietnam to standardise the Bank Identification Number (BIN) system nationwide.

Between now and June 30, 2011, Connect24 cardholders will therefore be able to request new cards with Vietcombank’s updated BIN. During that time, they will also be able to continue using their old cards. But effective July 1, 2011, all cards issued under the old BIN will be terminated.

Connect24 holds the leading share of the domestic payment card market, with 4 million cards outstanding out of an estimated 17 million issued by all banks nationwide.

Vietcombank deputy director Dao Minh Tuan said that, before the central bank’s regulation was issued in 2007, each bank was allowed to select its own BIN. But, when many banks issued their own cards, BINs were repeated sometimes, creating problems for ATMs to recognise cards.

To deal with the problem, the State Bank ordered banks to co-ordinate BINs, with the central bank to provide a BIN for each bank. The new BINs include six figures, starting with 9704, with the latter two figures different from each bank.

About 30 banks have been issued new BINs and will also reissue their bank cards sometime before the end of June next year.

“The cost to reissue all debit cards on the market may reach 120 billion VND (6.4 million USD) or about 7,000-8,000 VND per card,” said a representative of Smartlink Card Services Joint Stock Co who asked to remain anonymous.

VP Bank deputy director Duong Thi Thuy said that standardising BINs was very necessary in Vietnam, renewing all cards at the same time would overload this system.

ABBank director of individual customers Dam The Thai said the bank had been reissueing cards with the correct BIN and that the number of outstanding cards using the old BIN was only 10,000.

ABBank would renew cards for free customers between now and the end of the year, he said.

Debit cards issued since 2008 have the correct BIN and about 1 million international cards, which have standardised BINs, will not need to be reissued.

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Central bank maintains prime rate at 8 pct

In Vietnam Banking Finance on December 26, 2009 at 12:30 pm

The State Bank of Vietnam decided December 25 to keep the prime interest rate for dong deposit accounts at 8 percent.

Transaction conducted at an Asia Commercial Bank branch in Ho Chi Minh City.

Other interest rates remain unchanged compared to last month. 

The refinance interest rate is set at 8 percent per annum and the discount rate at 6 percent. The overnight rate in inter-bank electronic payments, and the rate of loans to finance balances in clearing transactions between the State Bank and commercial banks are all 8 percent per annum.

The decision will take effect as of January 1, 2010.

The bank said the management of basic interest, refinance and discount rates will be flexible in 2010 to keep market interest rates at reasonable rates to facilitate mobilization of funds and achieve growth targets. 

In 2010, the State Bank is aiming for a credit growth rate of 25 percent, lower than this year’s 37.73 percent.

The bank’s governor also asked commercial banks to provide loans to agricultural, forestry and aquaculture enterprises. 

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State Bank denies rumor of helping commercial banks

In Vietnam Banking Finance on December 16, 2009 at 10:40 am

The State Bank of Vietnam (SBV) on December 15 denied a rumor of pumping VND30 trillion into commercial banks to fortify liquidity as it was applying measures to limit credit growth in order to control inflation.

On the stock market, the rumor prompted investors to increase buying. Banking shares hit the ceiling of their regulated daily trading bands with high liquidity.

Governor Nguyen Van Giau said the State Bank encouraged competition among commercial banks, adding that the banks should set interest rates in line with their capabilities.

Earlier, a rumor that SBV would tighten monetary policy, increase compulsory reserves, and issue VND1 million bank notes, caused an immediate slump on Vietnam’s stock market December 2.

Bank officials denied the rumor.

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ACB bank starts promotions for card holders

In Vietnam Banking Finance on December 15, 2009 at 10:01 am

Customers at an ACB branch in Ho Chi Minh City

The Asian Commercial Bank (ACB) launched Dec. 14 a promotional program for ACB card holders nationwide, with over VND500 million (about 27,000) for the prizes.

The program, which will last until March 13, 2010, is applied for all ACB cards such as Visa/MasterCard, Visa Business, Visa Prepaid, Visa Electron, ATM2+/Visa Debit, MasterCard Dynamic, and MasterCard Electronic. As for every VND3 million in a card account, the card holder gets a code for a lucky draw.

The first 500 card holders getting codes will be given VND100,000 each in their account.

On Nov. 30, Ho Chi Minh City-based ACB received a prize for Vietnam’s best bank in 2009 selected by the Euromoney Magazine of the UK.

This year, the bank has won six prizes for the title “Best Bank in Vietnam” selected by magazines Euromoney, Asiamoney, FinanceAsia, Euromoney, Global Finance, The Banker and The Asset.

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Banks follow central bank, raise interest rates

In Vietnam Banking Finance on December 9, 2009 at 1:40 pm


Customers at a Techcombank branch, HCMC. Several banks have hiked deposit and loan interest rates after the central bank increased the prime rate to 8 percent. (Photo: SGGP)

After the State Bank of Vietnam increased the prime rate to 8 percent, several commercial banks have hiked deposit interest rates to a maximum of 10.49 percent.

Interest rates on US dollar deposits have also climbed by 0.3-0.7 percent to a maximum of 4.5 percent. 

Credit interest rates have also gone up — by 0.5-2 percent in case of dong loans to 11–17 percent, and 0.3-0.5 percent in case of dollar loans to 5.5-7.5 percent on short-term loans and 6-8 percent on medium- and long-term loans.

Many commercial banks have begun to resume selling of foreign currencies to help stabilize the forex market, the central bank said.

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Central bank raises rates

In Vietnam Banking Finance on November 27, 2009 at 6:14 am

The State Bank of Vietnam has hiked several key interest rates but narrowed the daily foreign exchange trading band.

With effect from December 1, the prime rate and recapitalization interest rate will go up to 8 percent from 7 percent and the discount interest rate to 6 percent from 5 percent.

Customers at an ACB branch in Ho Chi Minh City. The State Bank of Vietnam has decided to increase the prime rate and other interest rates along with other measures it hopes will stabilize the market and sustain economic growth. (Photo: SGGP)

The forex band has been reduced to ±3 percent from ±5 percent with effect from November 26.

These measures are meant to cope with the volatility in gold prices and rise in the dollar rate, SBV governor Nguyen Van Giau explained.

Following the changes, the greenback fell by 3.44 percent to stand around VND18,500, he said.

But this does not mean the central bank wants to weaken the dong and it is only a measure to strengthen control over credit growth and enable commercial banks to raise capital, he said.

Other measures under consideration include a hike in import tariffs on some items, limiting import of some non-essential goods to contain the trade deficit, and requesting for some large economic groups to sell foreign currencies to the central bank, he said.

Besides approving these measures, the Prime Minister also agreed that the interest subsidy for short-term loans would cease as planned with effect from December 31 and not be extended to the end of March 2010, he said.

Asked about the recent slowdown in the stock markets amidst a fear of a devaluation of the dong, Mr. Giau said the ultimate goal monetary policy changes is not to serve any single market but to boost economic growth, stabilize the economy, create more jobs, and increase the income of all sections of people. 

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