16 banks sign deal to hold deposit rates
Sixteen large banks yesterday signed an agreement to keep their deposit interest rates under 14 per cent for one-month terms - and 6 per cent for non-term rates.

In recent months, several commercial banks have flouted regulations by offering higher interest or bonus interest to entice depositors.

Some banks also gave depositors overnight interest of 14 per cent. These practices continued to introduce a high element of risk into the nation's banking system, said the State Bank yesterday.

Yesterday's agreement was signed by Vietcombank, Vietinbank, Agribank, Viet Nam Development Bank, Techcombank, Maritime Bank, VIB, VP Bank, PG Bank, Bao Viet Bank, GP Bank, Military Bank, Ocean Bank, SHB, Bac A Bank and Tien Phong Bank.

Their move was part of commercial bank efforts to implement Circular 30/2011/TT-NHNN issued by the State Bank of Viet Nam, effective from October 1.

The State Bank regulated that non-term deposit interest rates offered by commercial banks and other credit institutions be capped at 6 per cent per year.

The cap on deposit rates for term deposits of one month or more remains unchanged at 14 per cent - or 14.5 per cent at credit unions.

About 23 representatives from commercial banks participated the meeting in Ha Noi.

Tran Anh Tuan, general director of the Maritime Bank, said banks should set up daily supervisory teams to ensure the agreement was carried out seriously.

However, several banks said the central bank should not apply such administrative methods in the long-term and that Circular 30 should be only considered a temporary solution until the market became stable.

VPBank, PG Bank, VIB and OceanBank complained about what they said was a significant decrease in deposits from customers.

Nguyen Thi Mai Huong, deputy general director of OceanBank, said that her bank witnessed a decline of 20 per cent in deposits in recent days.

Duong Thu Huong, general secretary of Viet Nam Banking Association, said after the circular became effective, all banks slashed their non-term deposit interest rates to under 6 per cent per year, saying that although several small banks had found it hard to entice customers, the market was expected to become more healthy and transparent.

She also said that from the beginning of the year to September 12, the banking sector reached a deposit growth of 10.72 per cent and a credit growth of 8.63 per cent. She described this as an optimistic signal.

Hoang Viet Trung, deputy director of the State Bank in Ha Noi, said that the central bank was classifying banks and that weak banks would receive support from the SBV.

VNS

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