The Hong Kong & Shanghai Banking Corp (HSBC) announced to start issuing US dollar book entry certificates of deposits (CDs) in HCM City and Hanoi capital city as of Monday December 26, said the head of HSBC in Vietnam.
The HSBC provided CDs with terms of three-11 months to individual customers and one-11 months to entity customers.
The bank is conducting the first nominal value CDs issue from December 26, 2005 to February 24, 2006.
The HSBC sells CDs according to par value (no discount or sell higher than par value), and the CDs interest rate will be paid at the date of maturity.
Specifically, the CD interest rate for terms of one, three, six, nine and 11 month is in turn 3.25%, 3.4%, 3.7%, 3.8% and 4.0% a month.
However, the HSBC’s CDs are not the type of transferable financial instrument. CDs holders have to tie up invested money for the duration of the certificate’s maturity.
The HSBC also became the first foreign bank in Vietnam that was allowed to provide CDs to the country’s financial market.
A certificate of deposit or a CD is a special type of deposit account that typically offers a higher rate of interest than a regular savings account.
Alain Cany, chief executive officer of HSBC in Vietnam said that via this product, HSBC hope it could meet the rising client demand with one type of financial instrument that could bring higher benefits than other term savings accounts, and the principal money is secured.
The bank expects that it will raise about US$20 million from this first CD issue.