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Banks break promises, raise interest rates   2009-09-23 - Viet Nam Net

Just days ago, commercial banks, responding to a call by the Vietnam Banking Association, agreed to maintain present interest rates until the end of 2009. Yet deposit interest rates continue to rise.


The banking association called on banks to halt the interest rate race because it believed that banks raised interest rates not because they lacked capital, but to attract more clients. Bankers admitted that they felt it necessary to join the race because they might lose clients to other banks.


Yet, despite promises, the race is still on.


The Saigon-Hanoi Joint Stock Bank has raised its 13-month term deposit interest rate to 9.65 percent per annum.  This is the second time in September that the bank has raised deposit interest rates to attract more capital.


One week ago, the bank also raised interest rates for both US$ and EUR deposits. The EUR deposit interest rates applied to individual clients at Saigon-Hanoi Bank for 1-36 month term deposits. They have increased by two-fold over previous interest rates, while US$ deposit interest rates have increased by 0.1-0.2 percent per annum on average.


SeABank has also adjusted interest rates for VND and US$ deposits. The highest interest rate now applied is 9.87 percent, which represents an increase of 0.9 percent. Meanwhile, the highest US$ interest rate increase is 0.35 percent per annum.


Other commercial banks have also followed suit. An Binh bank has raised its interest rate by 0.15-0.5 percent. The highest interest rate for US$ deposits is now being offered by Habubank, at 4.15 percent per annum.


VietBank has raised the deposit interest rates of both VND and US$ for all terms by 0.15-1 percent with the highest interest rate at 10.05 percent. Those clients who deposit 50 million dong or more will receive an additional bonus interest rate of 0.1-0.25 percent per annum.


Interest rates have been escalating for a long time, but only incrementally. Previously, interest rates inched up by less than 0.5 percent each time, but since early September 2009, interest rates have been increasing sharply. The VND interest rate has increased by another one percent per annum over the last week, while US$ interest rate has risen by 0.15-0.5 percent. These increases are described as sharp, especially when interest rates are very high already.


While market interest rates keep rising, the VND interbank interest rate tends to decrease in comparison with the previous week. Interbank interest rate for 3-month term loans has decreased by 2.07 percent to 7.34 percent.


Decreases of 0.4-0.87 percent have been seen for other terms of deposit, allowing interest rates to hover from 6.89 percent to 9.48 percent. The US$ interbank interest rate has increased slightly by 0.02-0.08 percent.

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BUSINESS IN BRIEF 22/9   2009-09-22