SCB stops promissory note programme? Not so easy

Friday, April 18, 2008
On the afternoon of April 16, Saigon Commercial Bank (SCB) sent a document to relevant ministries on interrupting the bank’s VND promissory note issuance programme. However, it is not so easy to stop the programme.
SCB has affirmed that it has been following necessary procedures and respecting the regulations set by the Prime Minister, State Bank of Viet Nam and the Ministry of Industry and Trade on promotion programmes.
However, after discussing the matter with the Governor of the State Bank of Vietnam, SCB decided to cancel the promissory note issuance programme. Pham Anh Dung, General Director of SCB, stated: “SCB stopped the programme voluntarily.”
Why did SCB stop the promissory note issuance programme if it did not violate the current laws, while it needs to mobilise capital? What did the Governor of the State Bank of Viet Nam and SCB leaders say in their discussion to lead the bank to stop the promotion programme?
Dung has declined to answer all these questions.
However, Dung said that though SCB’s leadership has decided to stop the programme voluntarily, the programme is still running, because the bank would violate the laws if it spontaneously stopped the programme.
According to Inter-ministerial circular No 07 released by the Ministries of Finance, and Industry and Trade, promotion programmes can be interrupted in two cases: 1. because of force majeure and 2. the promotion programme launcher’s management agency asks for the stoppage of the programme in writing.
But neither of the two cases applies in this case; therefore, SCB has no reason to stop its promotion programme. The State Bank of Viet Nam and the Viet Nam Trade Promotion Agency under the Ministry of Industry and Trade have not released any document asking the bank to stop the promotion programme so the bank does not have the right to stop the programme spontaneously.
Dung said that once the two agencies release a document, SCB will stop the programme.
SCB has mobilised VND80bil worth of capital from the programme so far.
In related news, on April 17, the interest rates on the interbank market soared dramatically. Rates of 17-20% per annum are being offered for one-week, two-week and one-month term loans.
Sources say that SCB has to mobilise capital at high interest rates because the bank has been facing big difficulties in capital mobilisation since the ceiling interest rate of 11% was applied. The same situation is being faced by other banks, including banks listed among the top 5 joint stock banks in Viet Nam.
The ceiling interest rate scheme seems to be dissatisfying bankers, who say that it will distort the market. (DTCK)