By Thao Nguyen - The Saigon Times Daily
HCMC – Strong demand from banks in HCMC have caused gold deposit rates to rise strongly after remaining unchanged for the past two months, with the highest level recorded at up to 4% per annum for one-month term.
A teller of Nam A Commercial Bank said customers would enjoy an annual rate of up to 4% for depositing one tael or above for one month. This is the highest rate among banks that are seeking to attract gold deposits at home.
Asia Commercial Bank (ACB) last Thursday launched the product ‘ACB’s golden day’, replacing the previous highest rate of 2.5% with a yearly rate of 3% for gold deposit certificate buyers. The lender also pulled interest rates of normal gold deposit certificates up to 2.35-2.45%, up nearly one percentage point compared to the pre-Tet period.
The Vietnam Export Import Commercial Joint-Stock Bank (Eximbank) has also adjusted up gold deposit rates. Those customers who join the program ‘Golden term, golden incentive’ at the bank with a minimum deposit of ten taels will net a rate of 3% a year instead of 2.5% as previously.
Explaining the rise in gold deposit rates, Le Tham Duong, head of the Business Faculty of the HCMC Banking University, cited two reasons.
The first reason is that credit institutions need to increase capital supply to cut interest rates at the central bank’s request. For local lenders, attracting the bullion with an annual rate of 3% for conversion into the local currency is still much cheaper than that of Vietnam dong.
However, Duong noted, the move is often seen among lenders that are allowed to sell gold deposits for Vietnam dong.
The second is, according to Duong, cash-strapped credit institutions may use gold as collateral to borrow money on the inter-bank market and this has pushed up gold deposit rates at small banks these days.
The present stable gold price is good for banks since their customers have shifted from trading to depositing gold to enjoy higher rates, Duong pointed out.
Meanwhile, a senior executive of a HCMC-based bank said the central bank would mobilize gold from the public to develop the economy, under which lenders will act as mobilization agents. A number of banks thus have been in the process of staying ahead of the trend, the banker said.
Only when industry players offer such an attractive rate can they entice great gold volume from citizens, he asserted.