wiki globe

Posts Tagged ‘banks’

Banks to start year with challenges and oppotunities

In Uncategorized on January 12, 2011 at 7:14 am

Commercial banks are set to cope with challenges and opportunities in 2011 as monetary policies will be more flexible, Dr. Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee, said in an interview with Dau Tu Tai Chinh Newspaper.

(Photo:Minh Tri)

With the global economy will surely recover in 2011, foreign investments will return strongly to emerging markets in Asia, including Vietnam, said Dr. Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee.

“Statistics show foreign investments keep flowing constantly into Vietnam in the last four months. Despite the inflation rising relatively high, investors are not too worried about the possibly of an unstable macro economy as the basic rate caused by monetary policies remains low,” Nghia said.

The inflation will decrease to 7-8 percent in this year if the gasoline price is around US$85-90 per barrel, helping commercial banks to cut interest rates, he said.

“Commercial lenders had to cope with the difference between the long-term and short-term interest rates last year, which hit the banking system hard. Therefore they should strengthen their operation as soon as possible this year,” he said.

The deposit interest rate fluctuation at the end of 2010 showed the interest rate was not driven by both the monetary market and the governmental regulations, threatening the safety of banks’ operation, Nghia noticed.

“Lenders this year will also have to cope with issues from the foreign exchange rate. They should offer foreign currency loans with the interest rates, which are adequate to each type of clients,” he said.

The vice chairman of the National Financial Supervisory Committee also warned the competition of foreign-owned and local banks this year will become harsher as the formers will be allowed to take the dong deposits from Vietnamese clients.

“But I do not think local lenders will be so worried about that. Foreign banks remain behind local lenders as their weaker financial strength and a fewer number of branches nationwide. Moreover, the strict risk managements prevent them from taking risks in such a small market in Vietnam,” he said.

“Besides, human resource is also a tough challenge for foreign lenders. Therefore, the biggest competitor of local banks in the next couple year is still themselves.”

Local lenders will also have to change their entire accounting software to match up with new regulations in the Law of Credit Institutions, which took effective on Jan. 1st 2011, he said.

“The new Law of Credit Institutions has some more regulations including forbidding banks to deposit to each others and restraining the credit growth of banks,” Dr. Nghia said.

Source: SGGP

State Bank tries to prevent banks from increasing their interest rates

In Uncategorized on December 16, 2010 at 10:04 am

The State Bank of Vietnam has ordered its branches to monitor all other banks that have an interest rate higher than 14 percent a year.

The State Bank is trying to prevent banks increasing interest rates

On Wednesday, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) raised its one month interest rate to 17 percent per year, which will apply from 8-10 December with deposits of more than VND100 million.  As soon as this happen, other joint stock banks, also changed their interest rates to 17.5 and 18 percent a year.

Specifically, the floating interest rate of 36 month deposit of a bank was rebounded up to 18 percent a year, for all deposits over VND5 million.

Ho Huu Hanh, director of the State Bank of Vietnam in Ho Chi Minh City, said he has asked four delegations to investigate the banks about the skyrocketing interest rate.

This discision immediately made some banks reduce their interest rate from 17-18 to 14 percent a year.

An official from Techcombank said, “That it had not increased the interest rate of savings deposit to 17 percent, but it was only a promotional program for those long term customers”.

Furthermore, the State Bank in Hanoi has expressed their disagreement with the rising interest rate, saying it that it gave some banks an unreasonable advantage, which may lead to unfair competition.

Techcombank’s action had lead to a movement of deposits from other banks, forcing them to elevate their interest rates.

Meanwhile, Nguyen Duc Vinh, general director of Techcombank, admitted his bank had not being able to anticipate this affect, and has promised to cancel the program.

After the meeting, thousand of banks, agreed to lower their rate to 14 percent a year.

A spokesperson from the State Bank said, “The inflation rate this year will not exceed 12 percent, so, there is no reason for banks to raise their interest rate to 17-18 percent a year”.

In a related move, the State Bank has pledged to provide loans to smaller banks. All these banks require is to present their credit contracts, to the State Bank, to approve their for loans.

However, a joint stock bank’s leader said, “Some small banks are afraid to borrow capital, because they will be closely monitored by the State Bank, and this will lead to the larger banks raising their interest rates again”.

Source: SGGP

Banks bring deposit rates to below 15 percent

In Uncategorized on December 16, 2010 at 10:03 am

Commercial lenders lowered their interest rate on the dong deposits to 15 percent on Dec. 13 in accordance with their pleading at the meeting with the central bank earlier.

(Photo:Minh Tri)

Techcombank was among the first lenders reducing the deposit rate, offering the rate of 13.45-13.95 percent per annum.

The Hanoi-based lender, which is the fifth-largest bank in term of assets, triggered an interest rate race last week when announcing it would offer dong depositor rates as high as 17 percent per year.

Other lenders reacted by pushing their own rates up, some as high as 18 percent.
But these offers were rescinded after the central bank requested them to bring the rates down to prevalent market levels – 14 percent or less.

Asia Commercial Bank, known as ACB, also cut its highest deposit rate to 15 percent per year from 15.2 percent, which was earlier the special offering under its promotional pack titled “Making New Year fortunes”.

The government-run banks made a similar move, with Vietcombank lowering its deposit rate to 14 percent and BIDV cutting its rate to 13.5 percent.

Financial experts said the rate of 15 percent is adequate as lending demand at yearend is increasing sharply. However, they noticed that the current deposit rate would force lenders to raise their lending rates to 17-18 percent per year at least.

Vo Quoc Thang, chairman of the Vietnam Young Entrepreneurs Association, said with the lending rate of 17-18 percent per year, local businesses would struggle to cope with the increasing cost of raw materials and the harsh competition from imported products.

Many firms will be willing to make no profit this year to maintain their business, but this plan will be undone if the high lending rates last long, Thang said.

Many financial experts expected the interest rate would decline further on February as lending demand of local businesses cooled off.

They also said high interest rates will help lenders to separate borrowers. Lenders will offer regular and big clients loans with preferential rates. ACB offered an annual lending rate of 15.5 percent only to businesses.

Some small commercial banks, however, shunned the central bank’s request, keeping the interest rate on dong deposits at more than 15 percent. They said they offered the high rates for big deposits only.

These banks will negotiate the interest rate with clients in a face-to-face meeting only in attempt to avoid the central bank’s penalty.

A deputy general director of a commercial bank, who asked not to be named, disclosed many clients tended to deposit their money in the banks offering the highest rate. “Efforts to keep client from switching their money to other banks have seen many lenders offering the rate of more than 15 percent through negotiating,” he said.

Source: SGGP

Deadline for banks to raise capital pushed back a year

In Uncategorized on December 16, 2010 at 10:02 am

Prime Minister Nguyen Tan Dung has accepted a proposal from the State Bank of Vietnam to extend the deadline for banks to raise their chartered capital to VND3 trillion (US$141.7 million) by one year to December 31, 2011, said the bank on December 14.

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

The proposal was sent to the Government when it was found that commercial banks faced a looming December 31 deadline to meet stricter minimum capital requirements.

Earlier, the central bank had been adamant that if they failed to meet the deadline, banks would face closure, or be forced into mergers with other institutions. The bank said that the deadline was ‘hard-and-fast’ as the banks had had four years to prepare for the capital increase.

The Government issued Decree 141/206/NĐ dated on November 22, 2006, requiring banks to raise their chartered capital to at least VND3 trillion by December 31, 2010.
The Decree was aimed at eliminating any weak banks and strengthening the financial capacity and security of the banking system. 
The banking system has quickly developed during the past years of renovation. However, most of banks are small-sized and may be vulnerable to the ups and downs of the market.
Additionally, objective reasons like the global financial crisis and economic downturn have prevented foreign partners from pouring money in the banking system and the Vietnamese banks themselves from raising capital through issuing shares.
Besides, the Government has required the State-owned enterprises to focus on their main business lines, so they have withdrawn money from banks, causing difficulties for the banks.

By the end of October, all 22 commercial banks not yet in compliance had received the Central Bank’s approval to increase registered capital from an average of nearly VND1.6 trillion ($75.57 million) to an average of VND3.5 trillion ($165.32 million).
Eleven of these banks had received the State Securities Commission approval to raise additional funds by offering shares. However, because of the gloomy state of the market during the last several months, these plans were derailed.

The State Bank previously extended deadlines for commercial banks to meet higher capital requirements. Commercial banks were required by law to registered capital of at least VND1 trillion (US$47.23 million) by the end of 2008, but only 28 banks had met the requirement by the deadline. Another 10 managed to meet it only as late as the end of 2009, with the central bank granting permission for delaying the compliance.

Source: SGGP

Banks get extra year to raise charter capital

In Uncategorized on December 16, 2010 at 9:32 am

Banks get extra year to raise charter capital

QĐND – Wednesday, December 15, 2010, 21:6 (GMT+7)

Commercial banks have one more year to comply with stricter new minimum capital requirements.

The Prime Minister on Dec.4 set a new deadline of December 31, 2011, for banks to comply with the requirement that they maintain a minimum charter capital of 3 trillion VND (141.71 million USD).

He has instructed the State Bank of Vietnam to work with related agencies to amend Decree No 141, which sets the deadline at the end of this month.

The State Bank had earlier vowed that the deadline was hard-and-fast, since banks had had four years to prepare for compliance, and warned that banks failing to meet the deadline would face closure or forced merger or acquisition.

However, the process of increasing charter capital had been complicated for many banks by the global financial crisis, the withdrawal of investment by State shareholders, and a gloomy domestic securities market, said the head of the State Bank’s supervisory and inspection department, Duong Quoc Anh.

“The fact that the Government has discouraged State-owned economic groups from investing in non-core business lines and instructed these groups to revoke such investments has caused big trouble for a number of financial institutions,” Anh wrote on the State Bank website.

State-owned garment maker Vinatex, for instance, recently sold an 11-percent interest in Navibank, one of the banks unable to meet the new requirements.

In prior proposals to the Government, the central bank had insisted on the higher charter capital requirements in order to improve the security and capacity of the nation’s banking system.

By the end of October, 22 commercial banks not yet in compliance had received State Bank approval to increase registered capital from an average of nearly 1.6 trillion VND (75.57 million USD) to an average of 3.5 trillion VND (165.32 million USD). Eleven of these banks had received State Securities Commission approval to raise additional funds by offering shares.

The State Bank has previously extended deadlines for commercial banks to meet higher capital requirements. Commercial banks were required by law to register capital of at least 1 trillion VND(52 million USD) by the end of 2008, but only 28 banks had met the requirement by the deadline. Another 10 managed to meet it only as late as the end of 2009, with the central bank granting permission for the delayed compliance.

Source: VNA/ Photo: LDO

Source: QDND

Commercial banks raise VND deposit interest rate

In Uncategorized on November 9, 2010 at 8:51 am

Commercial banks raise VND deposit interest rate

In Uncategorized on November 8, 2010 at 5:12 pm

Australia to crack down on ‘arrogant’ banks

In Uncategorized on November 3, 2010 at 5:12 am

Time for banks to pay back to tax payers, UK expert tells seminar

In Uncategorized on November 2, 2010 at 5:41 am

Banks slash interest rates

In Uncategorized on October 20, 2010 at 7:05 am

Several commercial banks have lowered their deposit and lending interest rates in dong since October 15 as their commitment to the Vietnam Banking Association (VNBA).

Transaction conducted at a Techcombank branch in Ho Chi Minh City

Banks have cut their deposit interest rates by 0.2 percent points to 11 percent per annum.

Asia Commercial Bank was the first bank to apply the new interest rate on October 15.

Vietcombank and DaiA Bank got in line on October 16, followed by BIDV, Eximbank, DongA Bank, and MB Bank.

However, some banks have still maintained their promotion programs by offering money, interest rates and gifts. Therefore, their real interest rates remain unchanged at 11.2 percent per annum.

Vietnambank began lowering the lending interest rate to 11.5 percent on October 16.

Housing Bank of Mekong Delta has reduced its lending interest rates for many enterprises, with the interest rate for agricultural enterprises cut from 14.5 percent to 12-12.5 percent per year, the rate for property and food enterprises slashed from 16 to 13-14 percent and 12.5 to 11.5 percent per annum respectively.

On July 5, the Vietnamese monetary market received the event that commercial banks simultaneously cut deposit and lending interest rates in dong.
Through the consensus amongst the members of VNBA, the deposit interest rate of 11.5 percent was reduced to 11.2 percent per year. Lending rate also gradually decreased to about 12.5 percent – 15 percent per year, depending on the prioritized and preferential borrower groups.

Since then, the schedule to continue to cut down interest rates according to the government’s directive (down to 10 percent per year for deposits and down to 12 percent per year for lending) had yet to be done.

It was said that higher interest rates were one of the greatest difficulties for enterprises in 2010.
In 2009, many enterprises were in favor of low interest rates, supported by the government’s stimulus policy.
In 2010, interest rates increased sharply, plus the exchange rate increased along with material prices pushed up, which boosted production costs, while the expansion of business and markets was hard due to the impacts of the financial crisis.
Therefore, the loan interest rate was too high compared to the endurance of enterprises.

On September 27, the State Bank of Vietnam officially issued Circular 19, amending and supplementing a number of important points in Circular 13 to facilitate credit institutions to boost credit growth and mobilize capital.
Therefore, the roadmap to lower interest rates was expected to be carried out by banks from October 15.

At a meeting in late September with VNBA, many commercial banks agreed to cut interest rates.

However, banks have worried that the deposit interest rate cut will not enable them to absorb excess capital if depositors expect high returns. Therefore, capital might be directed away from banks and towards higher-yield investments.

A deputy director of a Ho Chi Minh City-based bank, who wished to remain unnamed, said “We must comply with the agreement. However, banks may become involved in a promotional war to attract depositors if new interest rates do not meet customers’ expectations.”

VNBA general secretary Duong Thu Huong said that further interest rate cuts would be executed with prudence with respect for market behavior and depositors’ expectations as inflationary pressures continued to grow during the final months of the year.

Source: SGGP