Vietnam Banks Lure Longer-Term Gold Deposits

HCMC – Local banks are taking advantage of the central bank’s loosening move rescheduling the ban of gold mobilization until June 30 to attract longer-term gold deposits by raising gold interest rates.

Asia Commercial Bank (ACB) lowered gold deposit rates to 0.5% annually a few days ago but the bank suddenly pulled up the rates to above 1% per annum on Thursday. At the same time, ACB also encourages deposit terms from four to six months instead of just one month as before.

ACB gold depositors of one-month term will be subject to many more incentives if they change the term into four to six months.

For instance, four-month tenor interest rate stays at 1.2% a year and deposit rate of five-month tenor and six-month tenor is put at 1.5% and 1.8% respectively. The lowest gold deposit at ACB is fixed at one tael which equals 1.2 troy ounces.

Similarly, the highest rate of gold certificates at Vietnam Export Import Commercial Bank (Eximbank) set for six months is 1% yearly, with shorter terms having interest rates fluctuating between 0.5% and 0.9% annually. However, the lender does not allow gold depositors to withdraw gold prior to maturity.

At Saigon Commercial Bank (SCB), customers are offered an annual gold deposit rate of some 1% but certain customers still enjoy a higher rate, at 2%, for depositing 15 taels or more.

According to Nguyen Thanh Toai, deputy general director of ACB, the fact local lenders raised gold deposit rates are in line with the market’s changes. At the moment, banks will utilize the remaining time of the extended gold mobilization ban to improve their gold liquidity, instead of purchasing large volumes from the market to avoid chasing up gold prices.

A senior executive of a big joint stock bank said his lender mobilizes gold to deal with liquidity shortage. He affirmed that gold mobilization does not bring about profits as the credit institution is unable to lend out gold or convert gold into Vietnam dong.

Despite higher gold deposit rates, it is difficult for banks to mobilize gold as local depositors are reluctant to shift gold from one bank to another.

Local demand for gold among lenders wanting to make up for liquidity shortages has considerably tumbled. Nguyen Cong Tuong, deputy sales manager of Saigon Jewelry Holding Co. (SJC) noticed gold demand of banks has weakened since early this month. In previous times, gold volumes sold to lenders were higher than the volumes consumed by residents, he said.

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