Week ending Oct. 21: finance and banking review

The SBV was reported to net inject VND16.378 trillion on OMO from Oct 17 to Oct 20 versus VND16 trillion one week earlier. The central bank added afternoon session on OMO from Oct 19.

The central bank’s moves

The State Bank of Vietnam announced fundamental principles in restructuring the local banking system, including developing a banking industry with diversified ownership structure, scales and types; strengthening the health and safety of the banking sector with focuses on merger and acquisitions of banks to increase competitiveness.

The SBV wowed to provide liquidity support to troubled credit institutions to ensure the health of each lender and to consolidate the banking system.

The central bank allowed 5 selected banks (Eximbank, ACB, Techcombank, Dong A Bank and Sacombank) and the Saigon Jewelry Company Limited (SJC) to sell additional 5 tons of gold to the domestic market in an attempt to reduce the local gold premium and stabilize the local market.

Finance and banking highlights

The interest rates in the interbank market rose by 3.5% p.a. during the week. The interbank interest rates stayed at around 16-16.5% p.a. for overnight and 17-17.5% for 1-week term.

The State Treasury failed to sell any of VND2 trillion Government bonds distributed equally for 3-year and 5-year bonds, auctioned on Oct 20 as no bidder registered to purchase the offered government bonds.

Vietnam’s foreign exchange reserve is estimated to be equal to 7.5 weeks of import, up from 3.5 weeks at the beginning of 2011.

Bad debts in Vietnam’s banking sector climbed to 3.21% of the total outstanding loans as of August, 2011, up 0.68% YoY.

Vietnam International Commercial JS Bank (VIB) sold another 5% stake to Commonwealth Bank of Australia (CBA), raising its partner’s stake to 20% maximum under Vietnamese law. The sale valued at VND1.15 trillion ($55 million).

Ha Anh Tuan, manager of Vietinbank Nha Be, Ho Chi Minh City was found not guilty of recent fraud scandal and did not break the regulation of the State Bank of Vietnam on interest rates cap for dollar deposits from institutions and individuals, the preliminary report from investigation agencies said.

Source Sophie/ News Writer/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial