Banks provides service of keeping gold for clients

Many banks have stopped mobilizing capital and lending in gold, but they still keep gold for clients. Some other banks have become more hesitant in mobilizing capital and considering lowering the interest rates to zero percent.

Eximbank was one of the first banks which announced the service of keeping gold for clients, starting from May 4. People, who have the demand for the service, can leave gold with the bank, at least 0.1 tael of SJC 9999 gold. The bank does not collect fee for the keeping service, but it also does not pay interest rates to clients. Those people, who only leave gold at bank overnight, or take back gold within two days, will have to pay the fee of 1000 dong per tael and 20,000 dong at least.

Since May 1, Eximbank has completely stopped the capital mobilization in gold by issuing gold certificates.

The Asia Commercial Bank (ACB) has also provided the service of keeping gold for clients, but it collects fee. ACB now charges the fee of 0.05 percent of the assets’ values, while the minimum fee is 20.000 dong.

Tran Trong Quoc Khanh, Director of ACB’s Gold Center said that the new service should be seen as a good thing. “It would be unsafe for people to keep gold at home. Therefore, the appearance of the new service could be seen as a good service,” he said.

Besides, he thinks that keeping gold for people when banks stop accepting gold deposits is a good way for banks to know exactly the volumes of gold that people have. This also serves as the good information source for the State to consider, so as to use the domestic sources in the most effective way.

At first, banks can offer preferences to clients by applying the keeping fee at zero percent. The director stressed that there is a difference between the “keeping fee at zero percent” and the “fee exemption”. In the former case, banks collect fee, and the fee at zero percent. It does not mean banks exempt fees. If so, two scenarios will occur when banks do not want to keep gold for clients any more: either they will have to refuse to keep gold for people, or they will impose guarantee fees.

The problem is that if keeping gold for people, banks will have to build stores and pay money to ensure security for the people’s assets. Meanwhile, they can use the sums of money for other purposes.

When asked if the service of keeping gold would become a tendency, Khanh said this would still depend on many factors, including the bank’s competition and the satisfaction of clients.

Meanwhile, Huynh Buu Son, a well known economist in Vietnam, said keeping gold is not a new kind of service at all. In the past, commercial banks once leased safes to clients, so that clients can keep any valuable assets, including gold. Son also said that this is a kind of popular services which are provided in any country in the world. In Vietnam, this would become a growing tendency in the time to come, when the State Bank’s circular on prohibiting gold mobilization and lending takes effects.

However, Son also thinks that this may happen that once people cannot deposit gold at banks, they would not try to keep gold any more, but would sell gold for Vietnam dong to deposit the dong at banks. Besides, they would prefer keeping gold at home instead of leaving gold with banks for which they have to pay fee.

ACB is now paying 0.6-0.7 percent per annum for 11-month term gold deposit certificates for SJC and ACB gold, respectively. Meanwhile, the lowest interest rates are 0.1-0.15 percent, respectively, applied to one-month term deposit certificates.

Other banks, such as Dong A, ACB and Viet A have eased the gold deposit interest rates to 0.1-1 percent per annum since May 5. Meanwhile, Sacombank is now offering 0.01 percent only for all terms of deposits, applied since late April.

Nguyen Thi Kim Xuyen, Deputy General Director of Dong A Bank, said that the gold mobilized at low interest rates can help ensure the liquidity for banks.

Also, in order to ensure liquidity, some banks have begun purchasing gold from people at the prices higher than the quoted prices – Vnexpress

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices