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Banks raise interest rates on gold deposits   2009-05-25 - Viet Nam News

Many commercial banks have increased their interest rates on gold deposits and launched promotion programmes as the domestic gold price soars and depositors look to withdraw their gold to sell.

Banks say nearly 80 per cent of gold borrowers are gold shops, while most depositors are residents and speculators.

The Viet A Commercial Joint Stock Bank has raised its annual interest rates on gold deposits by 0.4-0.7 per cent.

It now pays interest rates of 3.2, 3.4 and 3.6 per cent for six, nine and 12-month deposits respectively.

The HCM City Housing Development Bank also raised its deposit rates to 3.7 per cent a year for 12 and 24-month terms.

The Southern Commercial Joint Stock Bank is offering annual interest rates of 3.7 per cent for a 12-month deposit plus additional interest of 0.05-0.2 per cent per year depending on the deposit amount.

The bank’s promotion, Deposit gold, win gold, ends on June 30.

The Export Import Commercial Joint Stock Bank or Eximbank offers a cash bonus of VND25,000 per tael of gold (one tael is equivalent to 1.2 troy ounces) deposited for a six-month term.

Commercial banks have said there is increasing demand from gold traders, but residents with idle gold do not want to deposit their gold with banks when prices are rising.

Hence banks have to raise interest rates on gold deposits in order to mobilise more of the precious metal.

Gold shops busy

Banks say nearly 80 per cent of gold borrowers are gold shops, while most depositors are residents and speculators.

Many gold shops borrow gold from banks and sell it at high prices. They will later buy gold when prices are down to repay banks.

However, analysts say the gold price fluctuations may prove risky for banks if they don’t manage it well.

Besides, banks need to consider how to use their capital in gold most effectively before they decide to raise gold deposit interest rates for mobilising gold from the public, analysts says.

Domestic gold prices last weekend reached a record high of VND20.72 million (US$1,165) per tael following an uptrend in global gold prices.

Sai Gon Jewellery Holding Co last Saturady listed the buying and selling price about VND20.66-20.72 million per tael, up more than VND230,000 against last Thursday.

PNJ-DAB gold leaf at Phu Nhuan Jewellery Co was traded around VND20.66-20.73 million per tael.

World gold rose in price to $961.9 per ounce on Friday and closed at $956.5 per ounce in New York market, up more than 3 per cent compared to early last week.

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