Banks lower deposit interest rates after agreeing to cap

Techcombank lowered rates to 13.45-13.95 per cent and SCB and Eximbank to below 15 per cent.

Two state-owned giants, Vietcombank and BIDV, cut their rates to 14 per cent.

However, most of them set their maximum rate at around 15 per cent, though only for deposits of up to three months, indicating possible apprehension that rates may drop after Tet (the Lunar New Year) in early February.

Newswire VnExpress said ACB is offering 15.5 per cent, 0.5 per cent higher than the ceiling under the agreement, on 12 – and 13-month deposits.

Sacombank chairman Dang Van Thanh said hiking interest rates was an anti-inflationary measure but high rates could not be sustained for long periods.

After February next year, interest rates would drop since businesses' need for bank loans to stockpile goods would ease, he added.

A banking analyst, who declined to be named, said the 15 per cent interest rate was "reasonable" at a time when demand for capital was on the rise.

It ensured higher returns for investors than other asset classes, he added

At these deposit interest rates, commercial banks had to lend at 17- 18 per cent.

Vo Quoc Thang, chairman of the Association of Young Businesspeople, warned that 17-18 per cent interest rates would cause great difficulties for businesses.

They could cope with them for a few months and no more, he warned further.

Also on Monday the State Bank of Vietnam issued a strict warning to Ho Hung Anh, Techcombank chairman, and Nguyen Duc Vinh, its general director, for launching a three-day promotion offering 17 per cent interest on deposits.

SBV inspectors said this had caused chaos in the banking system and created instability in the financial and currency markets.

On December 9, the central bank had ordered Techcombank to conform to the agreement signed by the banks and stop offering high interest rates.