BIDV, Vietnam's second-largest bank by assets, said on Wednesday it was cutting dong lending rates to help exporters facing an economic downturn and boost domestic production.
The Hanoi-based, state-run Bank for Investment and Development of Vietnam (BIDV) said that, as of Friday, it would charge 6.5% on short-term loans to clients who had mounting stockpiles of steel billets, steel products, fertiliser, cement and medicine.
This is the first time a Vietnamese bank has offered lending rates lower than the central bank's benchmark base rate, which was cut to 8.5% on Dec. 22.
Interbank rates for dong loans of up to three months were fixed between 5.45% and 9.1% on Wednesday, against a wider range of 5.36% to 9.78% a week ago, according to Reuters data.
BIDV also said in its statement that it would offer dong loans at 8.5% to exporters who have signed direct export contracts and committed to selling foreign currency back to BIDV.
The annual rates of 6.5% and 8.5% will be applied to loans of up to three months for the two groups of customers, while small and medium-sized businesses could borrow at 9%, the bank said.
Viet Nam has forecast that export growth this year will slow to 13%, after a rise of 29.5% in 2008, due to the economic downturn in its major markets in the United States, the European Union and Japan.
The State Bank of Viet Nam, the central bank, is aiming to keep credit growth in the banking system at around 20% in 2009 after a rise of 21-22% last year.
Economists widely expect it to continue cutting interest rates and allow the dong to fall against the dollar to spur production and boost exports. (Reuters)
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