Vietnam Banks Hike Deposit Interest Rates, Ignoring Instability Risks
Commercial banks in Vietnam have raised interest rates on dong deposits to as high as 14% and 15% per annum on regardless of recent consensus on a 12% rate cap, saying the increase could help them retain the existing depositors.
Unlisted Western Bank is giving optional bonus rates of between 0.7% and 3% to depositors, prompting its real deposit interest rate to rise to 15% per annum – the highest rate among local banks.
This has contravened an agreement made between banks and the Vietnam Banks Association (VNBA) last Friday that the interest offered for deposits would not be allowed to go higher than 12% per annum.
The agreement was made after the State Bank of Vietnam, the country’s central bank, raised the base interest rate by one %age point to 9%.
Nominal interest rates are at 12% for most deposit terms. But some bank officials have been told to call depositors and offer at least 13.5% with other incentives.
As the interest-rate agreement does not prohibit promotions, there is the danger of an interest rate war, said Tran Hoang Ngan, a member of the National Financial and Monetary Policies Advisory Council.
Ngan called on the central bank to increase money supply through the open market operations (OMO) to curb the interest rates from soaring further.
Vietnam’s credit growth expanded 22.5% in the first nine months of this year while the broadest measure of total money supply, M2, and total deposits were up 21.29% and 22.81%, respectively. (Youth)
Vietnamese
