Vietnam’s central bank has asked the country’s largest bank by assets to slow loan growth in general, but to increase rural lending. The Chinese recently made the same requests of several Chinese banks (1, 2).
The State Bank of Vietnam has asked unlisted Agribank to limit loans this year to 20 per cent, after their loan book grew 24.4 per cent last year. Agribank should also increase its proportion of rural loans to at least 75 per cent in 2010, from 68.3 per cent last year, governor Nguyen Van Giau was quoted as telling the lender at its annual meeting last Friday. Read more
Just as China raises its reserve ratio for banks, Vietnam has lowered theirs. The State Bank of Vietnam has lowered the mandatory reserve ratio from 7 to 4 per cent for deposits of less than a year, and from 3 to 2 per cent for longer deposits. (China raised its ratio from 5 to 5.5 per cent, effective today.) The Vietnamese change will be effective from February.
The change suggests increased confidence and risk appetite by the Vietnamese central bank, as banks will have a smaller capital buffer in difficult times. The extra cash at banks’ disposal will permit greater lending. The new ratios will not apply to the Bank for Agriculture and Rural Development, Vietnam’s largest bank by assets, for which ratios of 3 and 1 per cent will apply instead.
Now there’s a refreshing approach. The Vietnamese central bank has denied a plan to bail out banks following rumours of a liquidity crisis in the sector. “The central bank is pursuing a stable monetary policy and trying to curb credit growth. No money pumping. No higher interest rates,” said governor Nguyen Van Giau. Commercial banks recently increased deposit rates in an effort to attract more capital, leading to rumours that the central bank would inject as much as 20,000bn dong ($1.05bn). Read more