Banks are now falling into surplus of gold, so they are racing to reduce gold deposit rate.
At present, the gold borrowing need of investors decreased. The number of customers borrowing gold to pay for house and land purchase is scarce although the gold deposit rate remains low.
The reasons are that the gold price is unpredictable and borrowing gold for payment activities is considered high risks.
Low gold borrowing need is making banks falling into stagnancy of gold. This forced lender continuously lower gold deposit rate. Currently, the gold deposit rate at some banks is closer to zero percent.
For example, at Asia Commercial Joint Stock Bank (ACB), in the latest adjustment (on March 9), the bank's gold deposit rate is at only 0.4-1.8 percent per annum depending on each term.
Although the gold deposit rate fell to zero percent, ACB still is in surplus of big amount of gold.
"Currently, ACB's total outstanding loans in gold accounts for about 40 percent of total gold deposits meanwhile the bank loosened some conditions in providing gold credit till 12 years (for house purchase) and seven years (for business and production expansion plans)", said Ly Xuan Hai, ACB's general director.
Similarly, the gold deposit rate at Viet A Commercial Joint Stock Bank (VietABank) has been also dropped deeper against last month. Particularly, VietABank's god deposit rate is at only 0.47-0.5 percent per annum for 1-18 month terms while it was 2.3-3.6 percent pa in February.
At Southern Commercial Joint Stock Bank (Southern Bank), the gold deposit rate is only 0.5 percent pa. Vietnam Export Import Commercial Joint Stock Bank (Eximbank) is also applying the gold deposit rate at 0.5 percent pa (for long terms) and 0.25 percent pa (for one month term).
Gold deposit rate benchmark continues downward tendency whereas at the end of 2009, banks strongly increased gold deposit rate, even up to 6-7 percent pa because commercial banks mobilised gold then sold out to support lending activities in dong.
In order to avoid risks, banks purchased gold via abroad accounts. However, after the State Bank of Vietnam (SBV) issued a decision disallowing banks to trade gold on accounts, commercial banks limited gold mobilisation activities for the fear of risk. Thus, gold saving rate decreased.
Dang Van Thanh, chair of Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank)'s director board, said that it is likely that the gold deposit rate will continue to fall, even banks will collect fee for keeping gold for depositors.
Anyway, for the fear of re-inflation, the idle money source is still being poured into gold and many investors consider gold as a safe investment channel. Therefore, many predictions said that gold price will increase in coming time, even to $1,200/ounce.
In fact, in the domestic gold market, the current gold price fell against the top price of 29 million dong per tael (on November 11, 2009). In details, the SJC gold price on March 12 slashed to 26.5 million dong per tael. In the world market, the gold price on the same day was at $1,100/ounce.
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