The State Treasury holds deposits of nearly VND170 trillion (US$7.23 billion) in three State-owned commercial banks - Vietcombank, BIDV and VietinBank - by the end of June, down 28 per cent against deposits held in January.

During the first six months of the year, the Treasury decreased its deposits at Vietcombank and BIDV by 59 per cent and 6 per cent, respectively, but tripled its deposits at VietinBank to VND50 trillion.

The decline of the Treasury’s deposits was among reasons Vietcombank’s total capital dropped under the threshold of VND1 quadrillion by the end of June despite its 7.9 per cent rise in mobilised capital from other institutional and individual depositors. It was estimated that the Treasury’s deposits at Vietcombank dropped sharply from VND171 trillion at the beginning of the year to VND72 trillion by the end of June.

According to experts, the Treasury’s deposit reduction at the banks was mainly due to the rising public investment disbursements. By the end of the first quarter, public investment disbursement was VND17.5 trillion, meeting only 4.4 per cent of the Government’s estimates, but it surged sharply in the past four months to reach VND150 trillion as of July 20, or 37.5 per cent of the Government’s estimates.

Experts said that inter-bank interest rates plunged because of difficulties in public investment disbursements and massive capital flows into the Vietnamese market, prompting the State Treasury to transfer large deposits from the State Bank of Viet Nam to commercial banks in the first quarter of this year.

According to Viet Dragon Securities Company, the withdrawal of the Treasury funds can have a negative impact on the liquidity of the market.

Earlier, Saigon Securities Incorporation also said that the good liquidity in the banking system last year was partly due to the slow disbursement of public investment, which was why a large amount of the State Treasury’s capital was deposited in some commercial banks. — VNS