Vietnam banks race to attract short-term capital

Vietnam’s banks are racing to attract short-term savings with cheaper costs to lend on the interbank market for higher interest rates, local newspaper Tuoi Tre reported on Tuesday.
According to the local newspaper, Western Bank and An Binh Bank has launched the product “one-day term savings in dong,” with the interest rate ranging from 8% to 12% per year, depending on the amount of the deposit.

ACB increased its one-week deposit interest rate in dong to the ceiling of 14% per year. At some state-run banks, the one-week deposit interest rate is also standing at the ceiling. The race for very short-term interest rates has recently occurred when banks cannot increase deposit rates for the long terms due to the deposit interest rate cap set by the State Bank of Vietnam (SBV).

According to financial specialists, commercial banks, including large banks, together are racing for short-term funding in order to have more cheap money to lend on the interbank market to enjoy higher interest rates.

On September 19, the lending interest rates on the interbank market for one-week term stood at 14.3% per annum, two-week term at 14.8% and one-month term at 15.8- 16% per annum.

On the same day, the State Bank extended the term of the open market transactions to 14 days, while the former was seven days. This extension was said to help banks have more time to attract capital and ensure liquidity.

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Sep 21 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