Several banks have narrowed their gold bar trading networks as this business is no longer attractive given waning demand, Nguoi Lao Dong newspaper reports.
Bank for Investment and Development of Vietnam (BIDV) has announced to suspend gold bar trading at its nine branches from May 15 after being allowed by the State Bank of Vietnam. Some experts said this bank’s decision is reasonable due to a decline in gold bar consumption.
In reality, many other banks have also relinquished gold trading at many of their branches due to a fall in revenue from the business.
On Monday, the HCM City branch of Orient Commercial Bank (OCB) said it would conduct transactions worth at least a tael of gold and that customers would have to wait for one to two days to receive gold bars as there is no gold bar available at the branch.
A senior executive at a joint stock bank in HCM City said bank branches in large cities such as Hanoi, HCM City and Danang could still generate revenues from gold bars but the figures are equal to one tenth of those in previous years. In mountainous and remote areas, gold bars can hardly find buyers.
Bullion trade results have not been included in reports on performances of some banks which used to be big players in this sector. The sector is no longer attractive to banks due to high expenses, large capital but few transactions.
According to a report by the World Gold Council (WGC), the gold demand worldwide plunged to the lowest level in 10 years with 973.5 tonnes in the first quarter of the year, down 7 percent over the previous quarter.
Though no data on the demand for gold bars in Vietnam in January-March and last year is available, experts said the demand is falling.
A representative of Phu Nhuan Jewellery Joint Stock Company (PNJ) said 300-400 taels of gold are traded a day compared to the previous 700-800, even 1,000 taels.
On Monday, the buying and selling prices of gold were VND36.63 million and VND36.81 million per tael, slightly decreasing over the previous trading session. Meanwhile, the global gold price fluctuated sharply.
Some analysts forecast the gold price may hit $1,400 an ounce this year while others thought it would hover around $1,350 per ounce.
http://english.thesaigontimes.vn/59803/Bullion-trade-no-longer-attractive-to-banks.html
