VietNamNet Bridge - Though Vietcombank is not the only large and powerful commercial bank in Vietnam, it was still chosen by the State Bank as the buyer in a deal issuing $1 billion worth of government bonds in dollars.

 

The deal, analysts said, is unprecedented in Vietnam in both the scale and mode of transaction.

Why Vietcombank? The bank has outstanding capacity to mobilize capital in dollars in comparison with other commercial banks, according to Tri Thuc Tre. 

The 2014 finance report showed that the deposit in dollars at Vietcombank was even higher than that of both VietinBank and BIDV, the other two large state-owned banks. 

The figures were $4.06 billion for Vietcombank, $1.34 billion for VietinBank and $1.48 billion for BIDV.

The dollar deposit value at Vietcombank was much higher than that of the remaining banks in the top 10, not including Agribank and SCB.

Vietcombank also led the interbank market in terms of dollar capital mobilization, estimated at $3 billion.

In 2014, the total capital in dollars mobilized from both the interbank market and public deposits by each of Vietcombank, VietinBank and BIDV was nearly the same, at $1 billion.

However, the majority of the $1 billion mobilized by BIDV came from credit institutions and the State Bank. VietinBank also got capital from credit institutions (58 percent of the total).

Meanwhile, 80 percent of Vietcombank capital in dollars in 2014 came from deposits. The capital from that source is believed to be more stable than the interbank market.

Vietcombank’s advantage in mobilizing capital from its clients also allowed the bank to have a percentage of loans on mobilized capital lower than that of other banks. A report showed that the ratio was 71 percent by the end of 2014.

An Ninh Tien Te has quoted its sources as commenting that with the deal, Vietcombank has earned a big sum of VND215 billion just within several days.

Just two days after the news about Vietcombank’s deal of buying $1 billion worth of government bonds appeared in local newspaper, on May 7, the State Bank unexpectedly announced the devaluation of the dong by one percent, from VND21,548 per dollar to VND21,673 per dollar.

As such, with $1 billion Vietcombank has invested in government bonds, it could pocket VND215 billion from the dong/dollar exchange rate fluctuation. 

However, analysts commented that Vietcombank can also get other big benefits as a State Bank partner in the deal. As for the bank, increasing investments in government bonds is in line with its strategy on optimizing capital use to improve the NIM (net interest margin).

There is no official information from the government about what the $1 billion will be used for.

Kim Chi