Vietnam Banks Predicted to Cut Interest Rates from Next Q2 The current high lending interest rates will be kept unchanged till the end of Q1 and start falling from Q2, Le Xuan Nghia, vice chairman of the National Committee for Financial Supervision, was quoted as saying. Nghia urged the government to request banks to cut interest rates for deposits in foreign currencies, mostly U.S. dollar, and hike dollar loan rates to ease off demand for the greenback, saying this could help lower dong interest rates. The senior economist attributed recent dong interest rate spikes to the strong dollar exchange fluctuations and high interest rates for dollar deposits at local banks. Nghia noted that the interest rate problem would cease if once inflation was lowered. The maximum interest rate offered on dong deposits has fallen to 14% from a record high of 17.5% recently, but interest on dollar deposits remains high at above 5%. Some banks pay even higher — Orient Commercial JS Bank … [Read more...]

WTO Rules to Heat Up Vietnam Banking Sector Leading financial experts have warned domestic banks that they could suffer market losses this year as Vietnam’s commitments with the World Trade Organization (WTO) on the operation of foreign banks came into effect. Foreign banks, which have become stronger in recent years, will now be operating on a level playing field with domestic banks. In addition to traditional advantages like modern technology and years of experience in retail banking services, the foreign banks continue to improve their capital potential as well as human resources. As a result, while many domestic banks have been unable to raise registered capital to the Government’s requirement of a minimum VND3 trillion, foreign banks have already increased their capital 4 or 5 times higher than their chartered capital. Some of them have charter capital 8 times higher than it was initially registered. Dr. Le Xuan Nghia, vice chairman of the National Financial … [Read more...]

Fitch: Vietnam Bank Reforms Positive, but Risks Remain High Fitch Ratings in London on March 7 reported that the Vietnamese Government’s plan to restructure the Vietnamese banking system is positive for the sector. But a lack of clarity about the proposals and uncertainty regarding the authorities' commitment and ability to go through with them means significant risks remain in the short to medium term. The government plans include the potential acquisition of bad loans from commercial banks, measures to boost capital levels and potentially the merging of weaker banks. Weak capital levels, tight liquidity, and deteriorating asset quality are among our main concerns in the relatively low-rated Vietnamese banking sector. The government's efforts to address these problems are therefore welcome. In particular, Fitch believes that the broader financial system would benefit from banking sector consolidation, as it could reduce the risk of insolvencies among smaller banks. These … [Read more...]

Fintellix CXO Briefing to help Vietnam Banks Prepare for SBV’s Basel Compliance Mandate Increasing global financial connectivity and complexity of financial products have driven central banks and regulatory bodies worldwide to enforce a variety of risk and compliance mandates. A common highlight in most mandates is the emphasis on automation, demand for quality data and building agility for future changes. Meanwhile the SBV has embarked on a Basel journey to establish a stable and stress-free financial ecosystem in Vietnam by launching a pilot implementation phase for 10 banks - to be eventually rolled out to all banks. Member banks are now faced with a choice between a tactical or a strategic approach, not to mention the challenges of preparing for Basel adoption. Scheduled to be held on 13 October at Melia Hanoi, market leader for regulatory compliance Fintellix, together with premier technology partners Vizen and Komtek, is hosting an exclusive CXO Breakfast Briefing for … [Read more...]