Vietnam central bank supports banks liquidity via conditional refinancing loans

The State Bank of Vietnam (SBV) offered conditional refinancing loans to 5-6 banks with VND1-5 trillion each, the Saigon Economic Times Online reported.

The names of these 5-6 banks were not released.

However, commercial banks are still reluctant to access refinancing loans from the central bank, considering this source of funds as last resort. Instead, they sought for interbank loans to deal with their severe liquidity drain, resulting in the recent interest rate hike in the interbank market.

The interbank interest rates were up 3-5% to 15- 16% p.a. for overnight, 21% for 2-week and 21.5-22% for 1-month terms, the newspaper added.

Local lenders were driven towards refinancing and interbank loans after the central banks imposed some restrictions in banks’ issuance of commercial papers from the beginning of October.

The SBV also opened two OMO sessions since Oct 19 for 14-day and 7-day windows to support liquidity in the local banking system.

Source Sophie/ News Writer/ StoxPlus

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Oct 26 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