VietNamNet Bridge – 2013 was really an eventful year for the banking sector which has been undergoing a restructuring process.

Interest rates drop to deepest low since 2005

The State Bank of Vietnam in 2013 cut down the managing interest rates by 2 percent, eased the short term lending interest rates applied to priority business sectors by 3 percent, and reduced the ceiling deposit interest rate by one percent.

Especially, it has allowed commercial banks to set up the interest rates for long term deposits since June.

The moves have helped the lending interest rates decrease sharply by 2-5 percent, if compared with 2012. The average interest rates are now at 8-9 percent per annum, while good businesses can borrow at 7 percent per annum.

Dong/dollar exchange rate stabilized, foreign currency reserves soar

The local currency was devaluated by 1.3 percent in the year, lower than the expected adjustment rate of 2-3 percent the State Bank planned in early 2013.

On the last days of the year, commercial banks quoted the dollar prices at VND21,085-21,125 per dollar. Meanwhile, the exchange rate quoted by the State Bank Exchange was VND21,100-21,246 per dollar.

The exchange rate stabilization allowed the State Bank to buy a big amount of foreign currencies from commercial banks. The foreign currency reserves had reportedly increased to $30 billion, a 50 percent increase over 2012 and 100 percent increase over 2011.

National debt treatment company makes debut

The Vietnam Asset Management Company (VAMC) was established on July 9, 2013, with the task of helping the national economy settle the commercial banks’ bad debts.

The first deal VAMC made was purchasing the bad debt of Agribank.

After three months of operation, VAMC has bought VND36 trillion worth of bad debts.

Commercial banks themselves have also been hurrying up to settle bad debts, thus leading to the slowdown in the bad debt increase, from 3.91 percent a month in 2012 to 2.2 percent in 2013.

The gold market stabilized

The State Bank of Vietnam has organized 76 bidding sessions so far, through which 69 tons of gold have been sold. A report says half of the amount has been used by credit institutions for payment finalization, while the other half has been launched into the market.

The great efforts made by the State Bank has helped narrow the gap between the domestic and international prices to VND35 million per tael, down by 24 percent if compared with the end of 2012.

A lot of M&A deals wrapped up

The most noteworthy deals made in 2013 included the merger of Western Bank into PV Finance Corporation to form up PvcomBank, the sale of 85 percent of stakes of TrustBank to a group of investors which led to the change of the bank’s name into Vietbuild Bank, and the merger of Dai A Bank into HD Bank which has bought French SGVF.

Sources said that Singaporean UOB is eyeing to purchase GP Bank, one of the weak banks which are undergoing a compulsory restructuring process. Meanwhile, Sacombank, HD Bank, MB, ABBank and Southern Banks are reportedly seeking foreign investors.

DNSG