Morning banking news on 14/6/2023

Interbank interest rates fell deeply, down 50% in the past 1 month

 Interbank interest rates fell deeply. The average overnight interbank lending rate is only 2.69%, only half of the similar interest rate in the US.

Interbank interest rates fell deeply, down 50% in the past 1 month

Interbank VND interest rates recently dropped sharply in all terms from 1 month or less.

According to the State Bank of Vietnam (SBV), the average overnight interbank lending interest rate (main term accounts for about 90-95% of the transaction value) by June 9 has decreased to 2 ,69%/year – the lowest level in more than 2 months.

From 5.54% in mid-April, the interbank overnight interest rate has continuously decreased in the past 2 months, currently down to 2.69%/year.

Currently, the overnight interbank rate in Vietnam is only half of the similar interest rate in the US. That is the federal funds rate (FFR).

The FFR is the rate at which US banks lend to each other overnight from their balances in the required reserve. FFR interest rates are determined through agreements between banks and are within the target range set by the US Federal Reserve (Fed).

While the FFR interest rate has been continuously increasing, the decrease of the interbank overnight interest rate in Vietnam has caused the difference between these two interest rates to fall into the negative zone for a long time.
Previously, the interbank overnight interest rate was usually maintained at a higher level than the US FFR rate to avoid putting pressure on the exchange rate. But the somewhat opposite monetary policy of the SBV and the Fed recently reversed the difference between these two interest rates.

Not only did the overnight interbank rate decrease, but other short-term interest rates also fell sharply. On June 9, interbank interest rates for 1-week, 2-week and 1-month terms also decreased to 2.85%/year, 3.17%/year and 4.71%/year, respectively. These are interest rates approaching the “cheap money” period in July-August 2022.

Thus, after a sharp increase in early April, interbank interest rates have cooled down and system liquidity has returned to a more abundant state.

According to MSB, the week of June 5-9, on the mortgage channel, the State Bank offered bids in two terms of 7 days and 28 days, each term was VND 50,000 billion, both with an interest rate of 4.5% but no volume. won the bid. The maturity volume for the week is 1,354.88 billion dong. The SBV did not offer T-bills but had VND16,900 billion of bills maturing last week.

Thus, in the past week, the SBV net injected 15,545.12 billion dong into the market through open market operations. Circulating volume on the current mortgage channel decreased to VND 293.83 billion, there was no volume of bills in circulation.

Rong Viet Securities (VDSC) said that the SBV will be consistent with its loosening orientation in the context that the pressures on inflation, exchange rate, and tightening of global monetary policy have partly passed.

A series of hydroelectric plants are pledged, banks are selling them to recover bad debts

Many hydropower plants in Gia Lai, Lam Dong and Kon Tum have been offered for sale by banks many times to recover debts.

Dak Psi Hydropower Plant is invested by Duc Nhan Dak Psi Hydropower Joint Stock Company. (Photo: Trungnguyenhoist)

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has just announced the auction of debts of two corporate customers, Duc Nhan Dak Psi Hydropower Joint Stock Company and Hoang Nhi Co., Ltd.

The starting price for this debt is more than 914 billion VND, down 102 billion VND compared to the previous time. The total outstanding balance of the temporary debt as of May 9 is 1,016 billion VND, of which the original debt is 633 billion VND.

Collateral for this debt includes the 18MW Dak Psi Hydropower Plant; construction material factory in Tra Da industrial zone, Pleiku city, Gia Lai province.

This debt is also secured by 17.86 million shares of Duc Nhan – Dak Psi Hydropower Joint Stock Company (unlisted) and 24,541 million shares of Nuoc Che Hydropower Joint Stock Company (unlisted). All these shares are owned by Mr. Ho Sy Thai.

In addition, many other real estates are also used as collateral for this debt such as houses and land in Gia Lai and Kon Tum provinces, owned by many individuals such as Mr. Ho Sy Thai, Mr. Ho Sy Duc, Mr. Do An Tan, Ms. Huynh Thi Kim Yen, Ms. Nguyen Mai Suong, Ms. Ho Thi Yen with many machinery and equipment, special-use vehicles, cars of all kinds.

However, this is not the first time that a hydroelectric plant property has been put up for auction.

Last May, BIDV Gia Lai branch put up for auction of Tan Thuong hydropower plant project in Tan Lam commune, Di Linh district and Tan Thanh commune, Lam Ha district, Lam Dong province by Tan Energy Joint Stock Company. Thuong is the investor. This plant has a designed capacity of 22 MW, has been auctioned many times from November 2021 to present.

At this auction, the starting price offered is more than 325 billion VND, down 133 billion VND compared to the first auction. The above price does not include costs related to the transfer of ownership/use of assets, registration fees, notary fees, registration fees and other costs (if any) when purchasing properties. , these costs are borne by the auction winner.

Tan Thuong Hydropower Plant Project has a designed capacity of 22 MW, power output of 108 million kWh/year with a total investment of VND 918 billion, with the main contractor being Song Da 9 Investment and Construction Joint Stock Company. .

Not only BIDV, in 2021, the Bank for Agriculture and Rural Development of Vietnam (Agribank) also offers to sell the debt of Someco 1 Energy Joint Stock Company, whose collateral is the Bac Giang hydropower project in the village. Dong Mac, Quy Hoa commune, Binh Gia district, Lang Son province. But the debt settlement in the past 2 years has not been successful. By May 2023, this bank sent a written request to the People’s Committee of Lang Son province to assist the bank in recovering the loans it had lent for this hydropower project. Agribank said that up to this point, Someco 1 Company has to pay Agribank an amount of VND 199 billion, of which the principal is VND 129 billion.

Before that, Agribank also auctioned many times the security assets which are land use rights and assets attached to the land of Dak Mek 3 Hydropower Plant in 2018 and 2019. The project has a capacity of 7.5MW, address at Dak Choong commune, Dak Glei district, Kon Tum province.

Agribank said that the auctioned property has an area of ​​9.5 hectares, the expiry date is September 16, 2059 and the Certificate of land use rights, ownership of houses and other land-attached assets No. BA 237628 dated March 1, 2010 by the People’s Committee of Kon Tum province, with an area of ​​44.2 hectares, the expiry date is September 16, 2059.

This is the collateral formed after the investment with self-financed capital plus mobilized capital and loans from credit institutions at Agribank Kon Tum branch to secure the loan of Hong Phat Dak Mek Hydropower Joint Stock Company. . Agribank put this hydroelectric plant for sale for the first time in December 2017 with a starting price of VND 179 billion. By the 10th time for sale in 2019, the starting price of the auction has decreased by nearly 91 billion VND, to 88.2 billion VND (equivalent to a decrease of nearly 51%).