ASEAN KEY DESTINATIONS
Vietnam’s 2nd largest bank to cut dong lending rates
BIDV, Vietnam's second-largest bank by assets, said on Wednesday it was cutting dong lending rates to help exporters facing an economic downturn and boost domestic production, reported Reuters.
The Hanoi-based, state-run Bank for Investment and Development of Vietnam (BIDV) said that, as of Friday, it would charge 6.5 percent on short-term loans to clients who had mounting stockpiles of steel billets, steel products, fertiliser, cement and medicine.
This is the first time a Vietnamese bank has offered lending rates lower than the central bank's benchmark base rate, which was cut to 8.5 percent on December 22.
Interbank rates for dong loans of up to three months were fixed between 5.45 percent and 9.1 percent on Wednesday, against a wider range of 5.36 percent to 9.78 percent a week ago, according to Reuters data VNIBOS.
BIDV also said in its statement that it would offer dong loans at 8.5 percent to exporters who have signed direct export contracts and committed to selling foreign currency back to BIDV.
The annual rates of 6.5 percent and 8.5 percent will be applied to loans of up to three months for the two groups of customers, while small and medium-sized businesses could borrow at 9 percent, the bank said.
Vietnam has forecast that export growth this year will slow to 13 percent, after a rise of 29.5 percent in 2008, due to the economic downturn in its major markets in the United States, the European Union and Japan.
The State Bank of Vietnam, the central bank, is aiming to keep credit growth in the banking system at around 20 percent in 2009 after a rise of 21-22 percent last year.
Economists widely expect it to continue cutting interest rates and allow the dong to fall against the dollar to spur production and boost exports.