LookAtVietnam Bridge – The State Bank of Viet Nam, SBV, had refinanced four small commercial banks to ensure their liquidity, its Governor Nguyen Van Giau told Viet Nam News yesterday.

The money would attract the yearly 7.5% interest that had prevailed since February 1, he said.

Valuable papers or credit documents had been used as collateral.

But the governor said the interest was nominal and the central bank was working to make it more suitable.

The adjustment was likely to be up.

Other banks were still awaiting refinancing.

The SBV reiterated in a document sent to commercial banks yesterday that it would continue its support for banks that were in critical trouble through a lack of liquidity but unable to mobilise capital from the open market because of sub-standard paper.

The troubled banks must lodge applications showing how much money they need to the central bank for consideration. Applicants must also pledge not to lend the money.

SBV Governor Nguyen Van Giau has ordered his officers to monitor commercial-bank credit growth; available capital and the usage of refinance capital.

The central bank has also acted to ensure control of the capital deficits; available capital and interest rates of the commercial banks.

It has not publicly identified any of the candidates for refinancing; nor have the commercial banks which need more funds identified themselves.

Capital hungry

The tightening of monetary policy to fight inflation has left commercial banks from north to south hungry for capital.

Banks in HCM City and Hanoi have reported only modest deposit growth during the past few weeks.

About 15-20 banks go to the open market each day to raise money at more than 30% interest rate yearly.

But it seems this is not enough to satisfy demand.

Some seek relief from the liquidity shortage in the non-term deposit rate while the Viet Nam Bank Association’s term-deposit rate is capped at a yearly 12% for longer than six months and 11.5% for less than half a year.

Saigon Commercial Bank, SCB, has lifted interest on deposits to a yearly 9% and yesterday VietA Bank made its non-term deposit interest rate the same.

Eximbank offered yearly interest of 10% for a 24-hour deposit, very close to the 11.5% for 1-6 month term-deposit.

The non-term deposit rate is usually about one third lower than the term – deposit rate. Others banks, including Asia Commercial Bank, Sacombank, Military Bank, VIB Bank, VP Bank were still offering yearly rates of about 3-3.6%.

"VietA Bank’s liquidity is good," a representative told Viet Nam News. "We have had to raise the rate to maintain our market share."

(Source: Viet Nam News)