Many banks still stuck in changing capital status

June 30 is the deadline for all credit institutions (that previously had converted gold deposits to the dong for lending) to covert capital status, but till now many of lenders have not completed their off-balance sheet.
Ho Huu Hanh, Director of the SBV-HCM City Branch on June 28 told VnExpress that many banks in the city have not finalized the conversion from dong to gold.

According to the director, gold price recently changed rapidly, causing difficulties for choosing a suitable price for purchase. Meanwhile, the time for banks to convert dong to gold is too short. So a lot of bankers proposed the Central Bank to extend some more time.

“Yet, there has not been any reply from SBV”, Hanh revealed.

Actually, banks used and converted so much capital in gold to the dong for lending, then it is very difficult for them to meet the deadline (June 30) recorded in the SBV’s Circular 11 dated in April.

Asia Commercial Bank (ACB) also is completing the conversion of capital status from the dong to gold. Talking with VnExpress.net, the banker Nguyen Thanh Toai did not give details on a specific volume of dong needed to be converted to gold, but he said that his bank would finish on time.

Factually, according to physical gold traders in Vietnam, volume of gold bar that banks purchased to balance capital status was not much. So the move has not affected strongly to the physical gold market, Nguyen Cong Tuong, vice head of Saigon Jewelry Co said.

Some other banks met the conversion some months ago, namely VietABank.

From the Central Bank banned gold trading on foreign accounts, commercial banks used deposited gold to sell, then took the dong for lending along with higher risks because gold prices always fluctuate. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial