VINACHEM

Thuy, an office worker in HCM City, felt lucky that the gold rings she put inthe wardrobe were not stolen by the burglars intruding into her house last week.However, she feels worried about the assets, because she now has nowhere to keepgold.

Commercial banks now refuse gold deposits. And when Thuy came to a banktransaction office near her house to ask for gold keeping services, she was toldthat she needs to come to a big branch.

Several tons of gold deposits have yet to be taken back

Do Minh Toan, General Director of ACB, said banks have been told to graduallyreduce the outstanding loans in gold by June 2013. However, ACB still cannot askfor debt payment right now, because the credit contracts signed before were alllong term, 5-10 year contracts. Toan said that it will take 3.5-4 years more toclear all the outstanding loans in gold.

Since the central bank has set up the deadline in June 2013, banks would have toconvert the gold outstanding loans into VND outstanding loans. If not, bankswould have to use their dong to buy gold for lending.

Also according to Toan, ACB’s outstanding loans in gold remain high, about100,000 taels.

Other bankers have shared the same worry with Toan. General Director of Dong ABank Tran Phuong Binh, said banks may have to negotiate with clients to convertthe current gold outstanding loans to Vietnam dong. However, it would be not aneasy task.

Binh explained that the gold credit contracts would only become due in some moreyears. Meanwhile, clients would have to suffer, because the dong interest rateswould be higher than the gold interest rates. Especially, the gold prices arenow much lower than the prices at the moments when they borrowed from banks.

In this case, banks would have to think of the solutions to minimize the lossesfor clients by offering lower lending interest rates, or selling gold atpreferential prices to the clients who agree to convert gold outstanding loansinto dong.

But what will happen, if clients don’t agree to convert gold loans intoVND loans?

According to Nguyen Dinh Tung, General Director of OCB, since banks cannotmobilize deposits in gold, banks would have to use their Vietnam dong to buy theamounts of gold equal to the gold outstanding loans. If so, banks would have tosuffer loss, because the VND interest rate is now at 8 percent per annum, whilegold lending interest rate just three percent.

Besides, they would also face the high risk of the gold price fluctuations.

Truong Van Phuoc, General Director of Eximbank, also said on Tuoi tre that bankscommitted before to lend gold to clients for 10-15 years, and it is impossibleto force people to pay gold back right now.

Phuoc said that Eximbank’s gold outstanding loans remain high, about one ton, or26,000 taels.

Meanwhile, the newspaper has quoted Nguyen Quang Huy, Director of the ForeignCurrency Management Department under the State Bank of Vietnam, that the centralbank is considering the measures to ensure the gold payment to gold depositors.

As for the gold borrowers, the central bank would not force credit institutionsto take back the gold they lent. The central bank said it respects the principleof non-retroactive effect of legal documents.