On March 19-23, 2012, the State Bank withdrew 13.8 trillion dong through the open market operation (OMO). However, the interbank market was still calm with low interest rates and good liquidity.
The interest rates on the interbank market have been described as “very good” but not good to everybody.
Some banks have abundant capital, others thirsty for capital
The demand for capital on the market was low, while big banks seemed to have enough capital and to spare. Therefore, the dong supply is profuse, thus forcing the interest rates down.
An executive of a state owned bank said that while the OMO interest rate was 13 percent per annum, the interbank market overnight interest rate decreased to 8-9 percent per annum. Meanwhile, one week loans were lent at 9-10 percent per annum, and 2 week loans at over 10 percent.
It’s clear that the interbank market is now much better than previously, from 2008 to early 2012, when the liquidity was weak, thus leading to the “goods statistics” in the reports by the State Bank.
However, some analysts have doubts if the statistics can truly reflect the common situation of the interbank market.
A thing that never happened before in the interbank market is that lenders usually require collaterals for the loans. The lenders, called “the rich”, which have profuse capital, have “set rules” on the market, after some borrowers deliberately delayed the payment.
Two groups of banks have taken shape on the interbank market, including the group of the rich which have mortgaged assets, and the group of banks with weak liquidity, no collaterals, and therefore, they find it hard to borrow money from other banks.
If only considering the reported interest rates and the capital supply and demand, one cannot say if this is the common situation for all members of the market.
That explains why just within five days, from March 19 to 23, though the State Bank withdrew 13,834 billion dong through OMO and issued bonds; the interest rates were still kept at low levels.
A banker has noted that the first group banks, which has high liquidity, does not intend to borrow capital, while the banks, which have high demand, cannot enter the “market” if they do not have collateral.
As for the second-group banks, in order to survive, they have to do everything they can to increase the liabilities and decrease the assets.
Collateral cannot replace the confidence
Replying to the complaint that the mortgaged assets are even required on the interbank market, the State Bank said that in principle, collaterals are necessary in any trade lending and borrowing deals, no matter on the interbank or other markets.
However, a banker said that it is necessary to find out why banks deliberately delayed the debt payment in order to settle the problem to the very root, instead of thinking that this is just a principle.
Meanwhile, Deputy Chair of a joint stock bank said that his bank has capital in excess and that the bank would lend to other banks without requiring collateral.
He said that the current difficulties of the banks are just temporary, and other banks can find their opportunities to lend to the banks. He said that if “the rich banks” are lending at 10 percent to other rich banks, and at 22 percent to the “poor banks,” he would only require 17-18 percent per annum.
Meanwhile, a banker has admitted that having collateral does not mean that banks can feel secure with the loans. Only when the confidence is restored, will the market become healthier.
Source: TBKTVN
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