ACB back to normal, says governor
ACB back to normal, says governor
Asia Commercial Bank (ACB) has resumed normal operations and the banking system remains safe, stated Governor Nguyen Van Binh of the State Bank of Vietnam (SBV).
Citizens rushed to withdraw their deposits from ACB from Tuesday to Thursday last week, following the arrest of ACB founder Nguyen Duc Kien and then general director Ly Xuan Hai. However, cash withdrawals significantly decreased on Friday and Saturday, Binh was quoted on the government web portal chinhphu.vn.
So far, the banking system is still safe and healthy.
The 47-year-old Ly Xuan Hai, former CEO of ACB, was arrested on August 23 for “deliberately violating State rules on economic management, causing grave consequences” under Article 165 of the Penal Code, Vietnam News Agency reports.
Specifically, cash withdrawals sharply surged at ACB but the bank was still able to fully pay their clients, in dong, foreign currency or gold. It is thanks to the helping hand of the central bank and the huge support of other credit institutions. Binh appreciated the work of information and communication that helps people access information timely and accurately so they can rest assured. Police forces also fulfill their role, ensuring social order and safety.
Given the already deployed short-term solutions and the long-term solutions in the banking restructuring programme, Governor Binh said the central bank has all the necessary measures to ensure normal operations of ACB and the entire banking system.
In addition, people should feel secure and confident, stressed the central bank leader.
The inter-bank market last Friday was calm again, with interest rates slightly falling as demands subdued.
SBV last Friday offered VND10 trillion via open market operations (OMO), but only VND1.6 trillion came to a number of small banks. The interest rate remained as 8 percent for seven-day terms.
From last Tuesday to Thursday, the central bank poured a total of over VND21.7 trillion into the system via OMO. ACB on Tuesday and Wednesday alone borrowed VND10 trillion, or about 54 percent of SBV’s supply via OMO.
Therefore, the fact that SBV injected less on Friday can be considered as a positive sign for liquidity of ACB after it received support from the central bank and other banks.
In the inter-bank market last Friday, dong supply and demand both stayed low. Inter-bank dong lending rate mildly dropped, ranging around 6 percent for overnight to one-week terms, down some 100 basis points against the day before.
Interest rates for 2-3 week and one-month terms fell by 50 basis points.
The inter-bank dollar market remained stable. Interest rates inched up slightly to 0.4-0.9 percent per year for terms from overnight to one week, 1.2-1.5 percent for two weeks to one month, and 2-2.5 percent for three-month terms.
The inter-bank forex rate was kept unchanged at VND20,828 per US dollar. The central bank maintained the buying price of VND20,850 each US dollar for credit institutions with positive foreign currency status.
The foreign exchange market was not so busy. The US dollar/dong exchange rate fluctuated around VND20,865-20,950, meaning the greenback prices in two days picked up some VND140.
Pham Linh, deputy general director of Oriental Commercial Bank (OCB), said dong weakened against US dollar because citizens wanted to add the greenback in their reserves, especially after the financial market was impacted by unfavourable information.
Meanwhile, the demand for foreign currency of businesses did not change much. Not so many firms bought dollars to import goods.
Meanwhile, a source from SBV said banks were seeking to buy more foreign currency, pushing up demand.
According to the source, foreign currency supply is sufficient at ACB, plus forex reserves of Vietnam have risen strongly in recent months, so the central bank is completely able to intervene in the market in case of volatility.
Earlier, at the review conference of the planning and investment sector on July 4, prime minister Nguyen Tan Dung said in the year’s first half, forex reserves had increased by $10 billion. Forex reserves cover ten weeks of import, which is forecast to reach 12 weeks by the year’s end.
Bloomberg
