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Banks quietly raise deposit interest rates   2010-05-27 - VnExpress

Without making the deposit increases public with prominent banners on websites or through advertising, some commercial banks have quietly raised their rates.


Kien Long Bank website still stated that the highest interest rate for 1-12 month term deposits is 11.6 percent per annum. However, if depositors come directly to a bank branch, they can enjoy interest rates of 12.5 percent. The 0.9 percent additional interest rate is called a bonus interest rate offered to depositors.


Similarly, another joint-stock bank has a website featuring deposit interest rates between 11.3 and 11.5 percent. A bank officer, however, admitted that, if counting the bonus interest rate, the actual rate would be 13 percent. At another joint-stock bank, the declared interest rate is 11.49 percent, but the actual rate is 12.99 percent with the bonus.


Interest rates of over 12 percent are considered very high since banks agreed to keep interest rates around 11.5 percent per annum.


Other banks do not offer interest rates of over 12 percent, but they are offering bonus interest rates to attract depositors. Asia Commercial Bank (ACB), for instance, offers a bonus interest rate of 0.2 percent for clients who deposit money from May 7. The actual interest rate that clients can enjoy when making three month term deposits is now as high as 11.7 percent. Viet A Bank clients can enjoy rates of up to 11.9 percent if they deposit more than one billion dong.


Some other banks do not offer bonus interest rates, but they give money as gifts. At VIB Bank, those depositing 100 million dong get one million dong as a gift, actually meaning that depositors receive one percent more in interest rate.


In the latest report on the monetary market performance for the week of May 14-20, the State Bank wrote that the interest rate was stable, but also named several banks that offered bonus interest rates, thus making the actual interest rates higher than those quoted.


The general director of a big joint-stock bank told VnExpress that no bank wants to raise deposit interest rates, because this is contrary to Government instructions to the State Bank to take actions to slash deposit interest rates. The Government wants rates down to 10 percent and lending interest rates lowered  to 12 percent.


Bankers respond that their clients demand interest rates much higher than 11.5 percent, the level suggested by the Vietnam Banking Association.


Therefore, banks must raise deposit interest rates to retain clients, but they have to do this quietly, even though they are not breaking any laws.


In principle, if banks need capital, they can mobilize capital from the interbank market, but the State Bank of Vietnam has decided that the sum of capital banks can mobilize from the market must not be higher than 20 percent of the total capital mobilized from the public. Therefore, the interbank market is not a viable option.


A bank based in Hanoi confirmed that, since it has raised deposit interest rates to over 12 percent per annum, deposits at the bank have decreased by 4 trillion dong.

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