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Central bank denies rumour of bank bailout   2009-12-15 - Viet Nam News

The central bank has no plans to bail out the nation's banking system, State Bank of Viet Nam Governor Nguyen Van Giau told Viet Nam News yesterday, December 14, countering rumours that had begun spreading on the stock market that banks were facing a liquidity crisis.

The rumour began to circulate when commercial banks recently increased deposit interest rates in an effort to attract more capital.

Whispers began to be heard on the stock market that the central bank would inject as much as VND20 trillion (US$1.05 billion) into the banking system, sending banking shares soaring and causing the VN-Index to end the day up yesterday, snapping a run of declining sessions.

"The central bank is pursuing a stable monetary policy and trying to curb credit growth. No money pumping. No higher interest rates," said Giau emphatically. "The central bank encourages a competitive market among banks, which can attract capital and lend it out based on their own capacity."

The central bank yesterday also announced a new subsidised-interest loan programme from January 1,2010 that would allow medium- and long-term borrowers in the agriculture, forestry and fisheries sectors, industrial processing, and science and technology to obtain loans at interest rates subsidy of just 2 per cent per year.

Eligible lenders would include State-owned banks, private commercial banks, joint-venture banks, foreign banks in Viet Nam, finance companies and credit unions.

The programme represents a retooling of the year's subsidised-interest loan programme, which allowed borrowers to take out shorter-term loans at an annual interest rate subsidy of 4 per cent. Under the programme, which expires at the end of the year, banks, finance companies and credit unions made about VND414.8 trillion ($218 billion) in subsidised-interest loans.

About VND289.92 trillion ($15.26 billion) was lent to private enterprises, VND65.1 trillion ($3.43 billion) to household enterprises, 3 and VND59.8 trillion ($3.15 billion) to State-owned enterprises under the programme, which was introduced last February as part of the Government's economic stimulus package.

The programme helped drive the overall credit growth in the nation's banking system so far this year to over 33 per cent.

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