Small Vietnamese banks breach interest-rate cap

After lying low for several months, several banks, especially smaller ones, appear to be again breaching the 14 per cent cap.

Branches of DongA Bank and HD Bank had been, in mid-September, caught violating the rule, and related officials were dismissed.

Speaking at an annual review meeting held by the central bank on Tuesday, Truong Thi Thuy Nga, head of Vietcombank's HCM City branch, said deposit interest rates were again being pushed up to 16-17 per cent.

She herself had to talk to many large customers to persuade them against withdrawing their deposit, and often had to put up with it since customers found deals elsewhere.

"If deposits keep flowing out of our bank to others, we have to have some flexibility to retain our customers, but will make an honest report to the State Bank of Viet Nam," she said.

Dao Hong Chau, deputy general director of Eximbank Viet Nam, noted that a number of smaller banks were breaching the cap due to lack of liquidity.