20 May 2004 07:44
Banking & Finance: Vietcombank Mulls over Credit Deal for Boosting Exports to Russia
The State-owned Bank for Foreign Trade of Vietnam (Vietcombank), one of the four largest banks in Vietnam, will sign
a $30-million credit agreement with a Russian bank to boost export of Vietnamese-produced goods to the potential Russian
market, according to Vietcombank's Deputy General Director Nguyen Thu Ha.
Vietcombank will sign a deal with the Bank of Foreign Trade of Russia on a credit line of $30 million next month, Ms.
Ha said.
Under the deal, Vietcombank will provide a maximum loan of $30 million to the Russian bank for re-lending to Russian
enterprises that import products of Vietnamese origin, she said.
According to Ms. Ha, the agreement aims to promote exports to Russia, a traditional but declining market for Vietnam.
At the moment, Russian importers face barriers to trade, including loans with high interest rates that make imported
goods from Vietnam more expensive.
The interest rate on US dollar loans in Vietnam averages 3.5% per year, while in Russia it is 14%.
If Russian importers can access the low-interest rate loans, they may increase the import volume from Vietnam, said
Ms. Ha.
Vietcombank signed a similar deal two years ago with the International Moscow Bank (IMB) in which Vietcombank agreed
to extend a credit line of $20 millionn to the bank.
The Vietnamese bank is also preparing to sign similar contracts with Russia's Interregional Investment Bank and
Promsvyatz Bank within the first half of the year, Ms. Ha revealed.
Nevertheless, some experts still have doubts over the improvement of the payment problem between Vietnam and
Russia.
The IMB, which received the first credit line from Vietcombank, has seen little demand thus far for the loans. The
bank, in 2003, gave documents of guarantee to Russian importers worth $1.65 million, or just 1/20 of the provided credit
line.
Furthermore, few Russian importers have actually benefited from the preferential loans, as the Russian bank has
blocked enterprises' access, claiming they are ineligible to borrow low-interest loans.
"The Russian bank said it must lend at a higher interest rate, while we want to give preferential loans of 5 -
6% per annum only," said Ms. Ha. Otherwise adding that the preferential loans will not help Russian importers.
However, Ms. Ha said she was optimistic about the possibility of cooperation with Russian banks. Vietcombank is
seeking another avenue of cooperation, Ms. Ha said, hinting that the bank is talking with smaller banks.
"We are planning to cooperate with small banks because it is these banks that Russian importers, who are doing
business with Vietnam, have established credit relations with," she said. Many have expressed eagerness to work out
a deal with Vietcombank as they believe demand is significant, she concluded
The problem, however, still remains that Vietcombank cannot deal directly with the banks, as it must work through a
prestigious bank, said Ms. Ha. This leaves open the possibility that Vietcombank plans to deal with Russia's
largest bank, the Savings Bank, which can provide guarantee services to smaller banks.
(VietNamNet May 19)
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