Banks begin charging fees on gold deposits

A worker processes wrappings for gold bullion at SJC Co.

The price fell from Tuesday's VND47.37 – VND47.22 from Monday's VND47.36 – VND47.21 million.

Nguyen Cong Tuong, gold trading deputy manager of gold trading firm SJC, said trading activities had been normal, with his company buying around 1,000 taels each day this week.

He said that sales might have been prompted by some people thinking that keeping the asset at home could be risky, now that banks have stopped mobilising gold.

The latest fall in world gold prices, and the strengthening of the US dollar against the euro, Australian dollar and the British pound, have contributed to the decrease.

The State Bank of Vietnam (SBV)'s prohibition on mobilising capital in gold by commercial banks took effect on November 25.

SBV hopes that the regulation will prevent gold speculation and persuade people to sell gold to banks rather than hoard it. It is hoped that customers will avoid retaining gold in banks if they have to pay to do so.

Now, rather than enjoying deposit interest rates like before, depositors must pay their bank a yearly amount. Since the regulations came into force, most banks are applying a fee of 0.01-0.05 percent of the preserved gold's value per year. These fees have not been regulated by the SBV.

However, the deadline for the banks to pay back the old to depositors was set for the nd of June next year.

According to Dr Vo Tri Thanh, deputy head of the Central Institute for Economic Management, the gold market has not suffered pressure from banks buying gold to ensure balanced statements. He said imbalance now exists at only two or three banks.

Generally, gold prices decline during the Christmas and New Year holidays as gold exchanges in the world close their doors.

However, in countries like China, India and Vietnam, this is the wedding season and thus gold consumption increases.

It is estimated that Vietnamese are keeping around 400 tonnes of gold at home, which could be used to boost economic growth.

However, it is a difficult to know how to attract gold for positive use, as the current unstable economy and the required fees for gold kept at commercial banks will only strengthen the public's deep-rooted habit of keeping the precious metal at home.

The SBV has also tried to limit the number of banks and companies able to buy and sell gold in a bid to create a stable and trusted gold bullion trading network. They have made licenses harder to obtain and are currently evaluating licence applications for eight banks and 13 companies.

Under a decree issued in April, banks and gold companies that trade gold bullion without abiding the new regulations will have to cease operation as of Jnuary 30 next year.