Vietnam Money - Rates steady, bank funds ample

Lending rates in Viet Nam were steady this week and a big state-run bank started to sell short-term debt even though most banks still have ample funds, bankers said on Monday.

Four state-run banks, Vietnam's top lenders, kept their overnight lending rates unchanged in the past week at 14% to 17%, against 16% in late August.

But the average lending rate rose marginally to 15.08% from 15.03%, and 12-month dong loans edged up to 18.38% from 18.31% last Monday, according to the interbank rate fixings compiled by Reuters that include offers from other banks.

The State Bank of Viet Nam, the central bank, said its decision to triple the interest rate on banks' reserves against their dong deposits to 3.6% from last Monday has had a positive impact on market lending and made loans cheaper.

State-run banks and Vietcombank, the largest among Vietnam's partly private banks, have cut lending rates by between 0.5 and 1 percentage point, the central bank said in its weekly review.

In a clear sign of ample dong funds, three bidders bought all of the three-year government bonds worth 500 billion dong auctioned last Friday on the Hanoi stock exchange at an annual yield of 16 percent, the exchange said.

The yield has eased slightly from 16.5% on three-year government debt sold to two investors on Aug. 22, in a sign that investors have ample funds as they were ready to deposit them with the government even at a lower yield.

At the same Friday auction investors also bought two-year bonds worth 265 billion dong, or 53% the total value on the State Treasury's offer, also at the annual yield of 16%, the exchange said.

On the other hand, state-run BIDV, Vietnam's second-largest bank by assets, said it has started issuing certificates of deposit to raise dong funds over a two-month period ending on Nov. 3, the fourth such move this year.

The Hanoi-based bank did not say how much it intended to raise from this issue but said in a statement to Reuters that it has raised 14 trillion dong from the previous three issues of certificates of deposit.

On the dollar front, the central bank set the dollar/dong mid point at 16,499 dong per dollar on Monday, down from 16,495 dong per dollar last Monday and 11 dong lower than a month ago.

"Foreign currency supply and demand stayed on a stable trend in the past week," the central bank's review said, adding that banks listed their dollar/dong quotations below the ceiling.

Banks are allowed to trade dollar and dong within a 2% band of 2% from the mid-point set daily.