Banks ease dong loan rates

(08/12/2008)

Vietnamese banks have cut lending rates slightly in the past week following central bank rate cuts but corporate borrowers are looking for a reduction of at least 2 percentage points more, they said Monday.

On average, state-run banks were extending dong loans at 14.1-14.7 percent during the week ending November 20 while partly-private banks charged 16.4-16.5 percent, a drop of up to 2.3 percentage point from the previous week, the State Bank of Vietnam said.

Dollar loan rates ranged between 6.8 percent and 9.1 percent last week, the central bank said in its money market review.

On interbank markets, 12-month dong loans ranged widely between 10-17 percent Monday, according to quotes from the country's four largest lenders.

Overnight dong loan rates firmed to 8-11 percent, against a fixing of 7.55 percent on Monday of last week.

Meanwhile, businesses were seeking further rate cuts to below 10-12 percent per annum for dong loans and 5-6 percent for annual dollar loans, Pham Thi Loan, chairwoman of the Hanoi Association for Entrepreneur Women, told a business-government meeting Monday.

"Several projects have insufficient investment funds and many projects have conducted bids but have no funds to pay contractors," Loan said at the Vietnam Business Forum, without naming any projects.

Last week, members of the cabinet also called on banks to slash their lending rates to below 10 percent as part of efforts to prevent an economic downturn.

State-run BIDV, Vietnam's second-largest lender, said it was cutting dong lending rates by as much as 1.6 percentage points as Monday in response to government measures to try to prevent an economic downturn.

It now charged 13 percent for short-term dong loans instead of 14 percent, while its loans to businesses in energy, steel, cement, fertilizer and medicine sectors would ease to 11.4 percent, the lowest in the market, from 13 percent last week.

Source: Reuters

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