Vietnam Money-Dong funds in surplus after increase in rates

HANOI, June 16 (Reuters) - Vietnamese banks have more than enough funds to cover compulsory reserves after attracting deposits by raising their interest rates following an official rate increase last week, the central bank said.

The State Bank of Vietnam raised its base rate to 14 percent from 12 percent, effective June 11, and banks increased their rates closer to a ceiling of 21 percent on deposits and loans in the Vietnamese dong VND=, up from the 18 percent in effect since May 19.

"The outstanding deposits of banks at the State Bank against their compulsory reserve level is already in surplus," the central bank said in a market review.

The State Bank of Vietnam requires banks to set aside 11 percent of their deposits of up to 12 months.

It said that it continued offering to buy paper from banks and also lent to small banks to ensure market liquidity.

Partly private Ho Chi Minh City Housing Development Bank said on Monday it was offering 18.5 percent for 12-month dong deposits, up from 15.5 percent, while its 12-month dollar deposit rate rose to 8 percent from 7.5 percent.

The bank's offer is now at the top of the range on the domestic market. Other Vietnamese banks are offering 12-month dong deposit rates at 17.1 percent to 17.6 percent.

On the interbank market, major lenders have kept overnight dong loans since June 9 in a wide range of 10 percent to 17 percent, compared with 10-13 percent in late May.

Foreign banks offered one-year dong loans at up to 21 percent VNIBOR1.