Deposits flowing from small to large banks

Small banks are witnessing a flight of deposits before the maturity to larger banks in Vietnam, VietBiz24.com reported on Tuesday.
At the transaction points of large banks like Vietcombank (VCB) in District 3, Ho Chi Minh City, in recent days a number of customers who came to make savings have increased significantly, in which most of the idle money were transferred from the smaller banks

Pham Thanh Ha, deputy general director of Vietcombank said that in September, the savings-based capital of Vietcombank recently posted a significant growth over the previous month, even when his bank slightly adjusted down dong deposit interest rate from 14% per year to 13.9% per year.

A survey in a transaction point of a small bank on Nguyen Dinh Chieu Street, District 3, Ho Chi Minh City in recent days showed that the number of customers who came to withdraw money was more than the savings depositors, even withdrawing the savings before the maturity.

This is not a typical case, but most small banks are facing with the reality of declining deposits since the central bank issued Directive 02. In particular, the strongest hand in investigation and inspections, as well as strictly handling violations of the deposit interest cap at 14% per year has forced banks to comply with the State Bank of Vietnam’s rules.

Although small banks have repeatedly proposed to the central bank the consideration of applying the interest rate ceiling for each different banking segment, instead of the rigid level of 14% per year for all segments because this will make it difficult for small banks in races to attract capital, but SBV remains steadfast in keeping a cap.

Source: Vietbiz24.com

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Posted by VBN on Sep 28 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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