Vietnam Daily News

Vietnam banks compete for end of the year deposits

Written by Dailynews.vn Saturday, 10 December 2011 19:16

Vietnam's banks are competing fiercely to raise capital through promotion programmes to meet rising market demand towards the end of the year, industry insiders say.

They say it is normal that most commercial banks face liquidity problems in last months of the year because the market's capital demand often increases significantly at this time.

However, the problem appears to be more acute this year because the central bank has asked commercial banks to strictly apply a 14 percent deposit interest cap.

To improve their liquidity, most banks have launched promotion programmes to keep old customers and attract new ones.

The Saigon Thuong Tin Joint Stock Bank (Sacombank) has started a promotion programme with gifts and prizes valued at a total of 18 billion dong (US$857,000) that will be given to depositors in both dong and the US dollar.

A 9 billion dong ($428,000) promotion programme is being implemented by the Vietnam Property Joint Stock Bank (VPBank while Hanoi Housing Development Bank (Habubank) is set to spend money equivalent to 10 taels of gold.

Many other banks, namely VietinBank, BaovietBank, HDBank, TrustBank and SCB, have also launched similar promotion programmes that offer attractive gifts and prizes to depositors.

Given the tight monetary policies in place at present, promotion programmes are considered an effective way to raise more capital from the public. But it is not as easy as it looks, market analysts say.

The scale of the promotion programmes would depend on the relative strengths of the banks. Banks with a strong capital base and a wide network tend to have more attractive gifts or prizes, and consequently, are often the winners in this end of the year competition.

A deputy general director of Maritime Joint Stock Commercial Bank (Maritime Bank), said mobilising capital at this time was a really difficult task, especially for small ones like his.

He said the promotions that have been launched recently have had some positive effect, but not as much as expected. In strictly implementing the deposit interest rate cap, big State-owned banks have more advantages than smaller commercial banks.

Nguyen Tri Hieu, former general director of Deutsche Bank in Vietnam, told Thoi Bao Kinh Te Vietnam (VnEconomy) newspaper that in general the entire banking sector's liquidity was stable, but the situation looked more serious for smaller banks.

Source: www.intellasia.net/news/articles/finance/111350328.shtml