Interest rates on gold deposits marks new fresh record high at 4% p.a.

Nam A Commercial Joint Stock Bank (Nam A Bank) currently offers interest rates on 1-month gold deposits at 4% per annum, the highest level of the whole banking sector, the Saigon Times reported.

Earlier, Asia Commercial Bank (ACB) and Vietnam Export Import Commercial Joint Stock Bank (Eximbank) lifted the interest rates they offer on gold certificates to at most 3% per annum, up from the previous level of 2.5% p.a.

According to Le Tham Duong – Head of Business Administration Department, Banking University of Ho Chi Minh City, there are two reasons for banks to increase interest rates on gold deposits. Firstly, domestic lenders seek to increase their mobilized capital and mobilizing gold is much cheaper than mobilizing funds in the dong.

Secondly, for those banks that have been battling their liquidity problems, mobilizing gold can be considered as a defensive move as they can use the mobilized gold as collateral to access interbank loans. Besides, as gold prices seem to be stable these days, local residents also want to deposit gold to earn interests.

The State Bank of Vietnam (SBV) plans to mobilize gold from the public through credit institutions which will act as its agents, prompting domestic lenders to rush to attract gold deposits to catch the trend, said an unnamed HCMC-based bank leader.

However, “only lenders that hold large gold stock and are likely to become the central bank’s agents will race to mobilize gold”, the source added.

Source Sophie/ StoxPlus

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

Posted by VBN on Feb 24 2012. Filed under Banking-Finance, Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry