North Korean Economy Watch

Previously, I posted information on the Jaeil Credit Bank in the DPRK. Today, with the help of a much-appreciated reader, I offer some hard-currency deposit and saving information from the Pyongyang Civil Cooperative Bank (민사협조은행). The interest rates and time-to-maturity intervals are identical to the Jaeil Credit Bank, however, the marketing material for the Civil Cooperative Bank does a better job of explaining the how interest payments are calculated.

Pictured above is a marketing flyer for the bank taken in Pyongyang. Below is a translation of the flyer:

외화저금안내
Currency savings guide

보통저금 [Usual saving] 1%
정기저금(6개월) [Regular Saving (6 month)] 2.5%
정기저금(1년) [Regular Saving (1 year)] 6%
정기저금(2년) [Regular Saving (2 year)] 7%
정기저금(3년) [Regular Saving (3 year)] 7.5%
정기저금(5년) [Regular Saving (5 year)] 8%
정기저금(10년) [Regular Saving (10 year)] 9%

Civil Cooperative bank provides to its customers the best credit and financial services. It is our general policy to treat your account information as confidential and it will not be shared with the third parties.

Now a regular savings saver can withdraw their interest prior to maturity and the entire principal amount can also be withdrawn before the due date (maturity).

How to Calculate Savings interest
1. Interest of usual savings and regular savings will be calculated until the day before and if withdraw prior to maturity regular savings will also be considered as usual savings.

2. One year is 360 days and one month is calculated as 30 days.

3. If the maturity date of the regular savings passes the entire amount including the interests will be extended under the same condition.

4. If the bank changes the interest rate, the original interest rate will be applied until the date of the change and the new rate will be applied for the principal and extended.

Interest calculation and payment (if withdraw prior to maturity)
1. In case of 6 months savings 0.5% , in case of 2 years savings; until 6 months 0.5%, after that 1%, in case of a 3 years savings; until 6 months 0.5%, till 2 years 1% and in case of 5 years savings; until 6 months 0.5%, till 2 years 1%, till 3 years 1.3% and the rest 1.5%, if 10 years savings; until 6 months 0.5%, till 2 years 1%, 3 years 1.3% , 5 years 1.7% and the rest 2% of interest will be calculated and paid.

2. If customers, who already have withdraw the interest prior to maturity from the regular savings, want to withdraw the entire principal of part of it, interest will be calculated as described above with out the withdrawn interest from the principal.

Business hours: Mon-Fri 9.30 am – 5 pm

Reuters offers a tale of how remittances from defectors in the South are making life easier for their family members who remain in the DPRK (a topic discussed here before). According to Reuters:

Next morning, she wired 15,000 yuan ($2,400) to the broker’s account at a bank in China, near the border. His wife confirmed receipt of the funds, informed her husband, and the defector’s brother got money in North Korea, a state where the average income is estimated at just $1,200 a year.

Brokers typically charge up to 30 percent fees for such transactions, but by and large, they work well.

“I heard it only took 15 minutes for my brother to get the money (after funds were wired),” said the defector, who is officially listed as dead in North Korea. “Two days later, my brother called me back saying ‘Thank you. We will spend your money wisely’.”

…

Some 70 percent send money home to the country they fled, says the Organization for One Korea, a South Korean support and research institute on North Korean defectors. Annual flows are estimated at $10 million a year as defectors try to help out families in a country where many are malnourished and lack access to basic healthcare.

…

Incoming funds from South Korea have become so significant that they have been dubbed the “Mount Halla Stream”, named after the tallest mountain in South Korea, said Kang Cheol-hwan, the author of “The Aquariums of Pyongyang,” a survivor’s account of North Korean gulags.

This has helped offset a decline in funds from ethnic Koreans living in Japan that dominated in the mid-1980s and was known as the “Mount Fuji Stream”.

“In the past, pro-Pyongyang people in Japan and some Korean Americans sent money but they grew old and strong sanctions from Japan also took a toll. So the generation providing remittances has changed and it is now the defectors in South Korea who are doing it,” said Kang.

I have also interviewed a few former North Koreans about remittances. They all report it is common and brokers charge about 30%.

Read the full story here:
Insight: A secret plea for money from a mountain in North Korea
Reuters
2012-7-11