Vietnamese banks are taking loans from overseas counterpartsas they seek to supplement capital for medium- and long-term loans, Viet Nam News reported March 30.

Saigon ThuongTin Commercial Joint Stock Bank, or Sacombank, signed an agreementto borrow US$50 million from Taiwan's Cathay United Bank Co. Ltd., while , or Vietinbank, agreed to borrow US$200 million ofsyndicated loans from 10 international banks in Taipei. The syndicate is led byBNP Paribas SA andTaipei Fubon Commercial Bank Co. Ltd.

More Vietnamese banks are expected to follow suit as dollarholders in the country transfer their money to demand deposits from timedeposits. The trend follows the Vietnamese central bank's decision to cut the interestrate on dollar deposits to zero percent, said Bùi Qu?c Dung, an official fromthe central bank.  

Further, industry insiders said commercial banks that usetoo much short-term capital to lend to borrowers use these dollar loans tosupplement and balance their long-term funds with their short-term capital.