Banks rush to compete as interest rates reach 12 per cent

Capital mobilisation is expected to be sharply increased

The move came after the State Bank of Vietnam (SBV) increased their base interest rate to 9 per cent per year from November 5 and decided to issue loans at variable interest rates.

After a meeting between SBV with representatives from five state-owed commercial banks and 11 joint stock commercial banks last weekend, members from the Vietnam Banks Association agreed to pick up VND deposit interest rates to a maximum 12 per cent per year.

The Bank for Investment and Development of Vietnam (BIDV) became the leader of the pack when they adjusted their rate to hover around 12 per cent for their VND deposit interest rates/year. From November 8, its short-term lending rate will be about 14 per cent per annum while medium and long-term rates are roughly 15.5 per cent.

Tien Phong Commercial Joint Stock Bank (TienPhongBank) also noted that, from November 8, its term saving interest rate has been hiked to 12 per cent per year. Besides the competitive interest rates, depositors will get attractive gifts through promotional programmes. They will also have a chance to receive gifts in cash if introducing new depositors to banks.

To implement SBV’s monetary policy and maximise benefits for customers, Ocean Commercial Joint Stock Bank (OceanBank) has applied the new deposit interest tables with the highest level of 12 per cent for terms from one month and over.

OceanBank said its total deposits were estimated to be at VND46.332 trillion ($2.32 billion) and total outstanding loans reached VND15.682 trillion ($784.1 million). Credit structure is balanced in line with terms.

In addition to announcing the new interest rate tables peaking at 12 per cent, Vietnam Prosperity Bank (VPBank) has launched a promotional programme entitled “Driving Shi and Mercedes along with VPBank” with gifts worth over a combined VND11 billion ($55,000).

This is among VPBank’s big promotional programmes this year and is the first since VPBank changed from its previous name of Vietnam Private Bank.

The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has just announced a programme called “Deposits for benefits-gifts” from November 11, 2010, to February 5, 2011. This programme is applicable for all customers who deposit money in dong under floating interest rates and in terms of one month and over, or who make deposits of at least VND20 million ($1,000).

A banking representative said promotional campaigns have helped them to attract a large number of customers. In addition to the application of VND deposit interest rates of 12 per cent per year, many banks will launch promotional programmes in the near future.