Big cash holders put money into circulation as interest rates down  Making long term deposits instead of short term, or putting money into other investment channels--is the way the businesses keeping big money in their coffers tries after the ceiling bank interest rate reduced to 6 percent per annum.   “We’ll lend our money for profits or funnel cash into other investment channels instead of depositing at banks,” said Nguyen Hoang Giang, CEO of VNDirect Securities. VNDirect was named as one of the businesses which had “pockets clinking with plenty of money” in 2013, holding VND1.115 trillion in cash, including the bank deposits worth VND1 trillion. The deposits brought the profits of VND63 billion to VNDirect in 2013. However, the figure represented the 37 percent decrease in comparison with 2012 due to the interest rate reductions. A report showed that 21 securities companies reportedly had the cash volume of over VND1 trillion, which included the cash kept by the companies, the bank deposits and the money in circulation. Bao Viet’s 2013 finance report showed that the group had VND7.46 trillion in cash, including the bank deposit worth VND761 billion and the short term deposits at some finance institutions with the interest rates of 2.9-7 percent per annum on average. Tran Trong Phuc, CEO of Bao Viet, said the bank interest rate reductions will surely make the group’s profits decrease. In fact, the interest rate reduction is foreseeable, while Bao Viet and other businesses have prepared for this. “We would focus on insurance and other investment activities,” Phuc said. “We consider switching some short term deposits into long term deposits (to enjoy higher interest rates – reporter) or inject money in bond.” Some businesses said they do not care much about the bank interest rate performance, because depositing is just the method that helps them keep money. Hoang Anh Gia Lai Group now has VND2.437 trillion deposited at banks. In 2013, the huge capital alone brought the profit of VND110 billion to the group. Nguyen Van Su, CEO of Hoang Anh Gia Lai, said the group still does not have any new plan with the bank deposits after the State Bank of Vietnam decided to cut down the ceiling deposit interest rate to 6 percent. Su said the group does not aim at profits when depositing money at banks, therefore, there is no worries about the interest rate cuts. “The deposits simply serve as the emergency fund which helps the group in low-liquidity period,” he said. “We don’t have much idle money to deposit at banks.” Meanwhile, Nguyen The Phuong, Deputy CEO of FPT Group, thinks the interest rate reduction is the good news. “The interests from the deposits would be lower. However, FPT’s outstanding loans are still higher than the deposit balance,” Phuong said. By the end of 2013, FPT had had VND1.4 trillion worth of bank deposits, while it got VND106.7 billion worth of interests from the deposits. Can Van Luc, a well-known economist, said the bank interest rate reductions would prompt businesses to switch their short term deposits into long term deposits to enjoy higher interest rates. This would be the good news because banks would be able to attract more medium and long term capital. “If so, businesses would be able to approach bank loans more easily,” Luc commented. VNE