The banks are ready…
June 30, 2013 can be considered a significant milestone for the domestic gold market. In accordance with government regulations, on June 30, commercial banks and credit institutions were required to settle their gold positions, meaning they had to cease gold mobilization, return gold to depositors, and recover or convert gold-denominated loans into Vietnamese dong.
(Baonghean)June 30, 2013 can be considered a significant milestone for the domestic gold market. In accordance with government regulations, on June 30, commercial banks and credit institutions were required to settle their gold positions, meaning they had to cease gold mobilization, return gold to depositors, and recover or convert gold-denominated loans into Vietnamese dong.
In Nghe An province, there are five commercial banks and one gold trading enterprise that previously engaged in gold mobilization, including: Vietnam Export Import Commercial Bank (Eximbank), Techcombank, Asia Commercial Bank, Saigon Commercial Bank, Vietnam Prosperity Bank, and the Agribank North Central Gold Branch. However, Nghe An is a small market, mainly focusing on gold mobilization with limited quantities. Our investigation revealed that commercial banks in the area proactively settled their gold positions before the deadline. However, a small amount of outstanding balances that customers had not yet withdrawn were automatically transferred to a safekeeping arrangement by the banks.
Gold trading at Agribank's North Central Gold Branch.
Mr. Nguyen Duy De, Director of the Agribank North Central Gold Branch, stated: The gold settlement process for the Vietnam Agribank Gold Corporation and its North Central branch has been ongoing for some time, and gold mobilization ceased more than a year ago. At the Agribank North Central Gold Branch, only a small amount of gold balances remain due, but customers have not yet withdrawn them. The branch has switched to a safekeeping arrangement as per regulations. Due to the gold settlement, many customers withdrew gold, sold it, and deposited the proceeds in VND at the branch, increasing the VND deposit balance by approximately 20% compared to before.
The settlement of gold transactions by this deadline does not affect business. The branch has a long-term strategy of increasing its product offerings, such as jewelry, rings, and high-end AJC-branded products, to meet customer demand and contribute to market stability in the area. However, this time, gold prices have fallen to their lowest level since 2008, so the number of customers buying gold has increased two to three times compared to usual, with the branch selling an average of 200-300 ounces of gold per day. Conversely, the amount purchased has decreased significantly, only about one-third of the amount sold. Decree 24/CP on the management of gold trading activities has come into effect, ending gold mobilization and increasing people's confidence in the Vietnamese Dong. The macroeconomic policies of the State Bank of Vietnam have boosted confidence in the domestic currency.
At the Saigon Commercial Bank (SCB) branch in Nghe An, Mr. Phan Huu Phung, Director of the Nghe An branch, stated: The branch stopped mobilizing gold last year. Currently, there is still a gold reserve worth approximately 10 billion VND that customers have not yet settled. The bank has switched to a safekeeping system. If customers do not settle their deposits by the deadline and continue to keep the gold at the bank, they will have to pay a safekeeping fee. Currently, the branch has prepared sufficient gold to meet the settlement needs and is waiting for customers to come and collect it. After the gold settlement deadline on June 30th, gold buying and selling transactions at the Saigon Commercial Bank branch continued as normal. Due to the sharp drop in gold prices in recent days, the number of customers buying gold has increased by about 10-20% compared to the time when prices were high. Among them, some customers whose gold deposits have now matured are selling it to the bank to receive VND.
At the Nghe An branch of Asia Commercial Bank (ACB), Ms. Bui Thi Thanh Duc, Deputy Director, stated that by June 30, 2013, all gold deposit accounts at the branch had been closed, and the gold loan balance was zero. Currently, there are still over 100 taels of gold that customers have not yet claimed. All of this deposited gold will automatically be converted to a safekeeping arrangement starting July 1st.
At this point, commercial banks in the province have officially closed their gold lending and mobilization activities. If people do not wish to withdraw their gold, the banks can negotiate to switch to a gold safekeeping service for a fee.
Text and photos: Quynh Lan
