SBV trades non-SJC gold, commercial banks make fat profit

Mar 20th at 22:10

20-03-2013 22:10:50+07:00

The fact that the State Bank trades non-SJC bullion gold as per the newly issued Circular No. 06 has helped commercial banks make fat profits. Meanwhile, people have been put at a disadvantage when the domestic gold price is still higher than the world price.

SBV’s move makes banks happy

Though ACB reported the multi-billion dong loss from gold trade activities, experts still believe that gold trade is still a profitable business.

And they have every reason to say so. Since the day the new regulation on bullion gold trade took effects on January 10, 2013, over 20 commercial banks have asked for the permission to trade bullion gold.

After a lot of extensions, the State Bank of Vietnam has decided that commercial banks must stop mobilizing and lending in gold by June 2013. However, analysts believe that banks still have not gathered enough gold to pay back to depositors by now.

Therefore, the State Bank has to take a series of measures to “rescue” the banks. Especially, it will trade non-SJC gold as well.

However, it’s is enigmatic that while the State Bank decides that SJC is the only national gold brand, it has also accepted to buy non-SJC gold as well.

Observers say the volume of non-SJC gold kept by commercial banks has reached thousands of taels. Especially, the banks have been collecting the non-SJC gold, not made by them, to convert for SJC gold.

This will not only help banks get more SJC gold, but also bring a fat profit to banks, because they can buy non-SJC gold at very low prices. It is estimated that the price gap between SJC and non-SJC gold is as high as VND3-4 million.

More than a half of the companies which hold non-SJC gold are commercial banks, namely Sacombank, ACB, Agribank and Eximbank.

The deputy director of a gold company belonging to a commercial bank has admitted that the recent moves by the State Bank have provided “valuable support” to the company, which can offset the loss it incurred when spending money to buy equipments to make bullion gold.

Under the new regulation, SJC is the only national gold brand, while the State holds the monopoly of making and trading bullion gold, the equipment has been left idle.

Gold shops’ future uncertain

A lot of gold shop owners complained that they had to trade bullion gold 3 months ago, because they cannot satisfy the strict requirements set by the State Bank.

NA, the owner of Bac A gold shop at No. 110 Tue Tinh street in Hanoi, said he previously traded tens of taels of gold a day. Since it was a small gold shop, it mostly traded 0.1-0.2 tael bar gold products which were sold very well. The revenue has dropped dramatically over the last three months because it has to stop trading bar gold.

The move by the State Bank of buying non-SJC gold is believed to be the good news for big goldsmith companies such as Bao Tin Minh Chau and Phuong Nam.

However, the deputy director of a company which is the owner of a non-SJC brand, said that most of the trading activities have been carried out with SJC gold, while the transactions with its non-SJC brand gold just account for five percent, because it was not sure if the non-SJC gold is convertible.