Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Presidential adviser resigns over 'shoe-shine scandal'

Read more

THE WORLD THIS WEEK

The World This Week - April 18th, 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - April 18th, 2014

Read more

WEB NEWS

France's top consumer group sues Internet giants

Read more

WEB NEWS

Web users pay tribute to South Korea ferry victims

Read more

AFRICA NEWS

A landslide victory for the 'invisible candidate' in Algeria's Presidential polls

Read more

#THE 51%

Breaking stereotypes

Read more

#TECH 24

Galaxy S5 v. HTC One (M8): Which is the right one for you?

Read more

FRANCE IN FOCUS

New PM Manuel Valls outlines priorities

Read more

  • Deadly shootout in eastern Ukraine threatens Geneva deal

    Read more

  • S.Korea president says captain’s action akin to ‘murder’

    Read more

  • Why Syria’s cash-strapped jihadists let hostages go

    Read more

  • Video: Ukraine crisis overshadows Easter celebrations

    Read more

  • The Great War's unsung four-legged heroes

    Read more

  • UK’s Hamilton cruises to victory at Chinese Grand Prix

    Read more

  • In pictures: French kite festival takes flight

    Read more

  • Freed French journalists arrive home after Syria ordeal

    Read more

  • Syria’s Assad visits recaptured Christian town at Easter

    Read more

  • Le Pen’s National Front fail to woo Britain’s Eurosceptics

    Read more

  • PSG clinch fourth League Cup title after beating Lyon

    Read more

  • Militants kill Algerian soldiers in deadly ambush

    Read more

  • Scores killed in South Sudan cattle raid

    Read more

  • VIDEO: Anti-Semitic leaflets in Eastern Ukraine condemned

    Read more

  • Does Valls’ upcoming Vatican trip violate French secularism?

    Read more

  • Obama signs bill to block controversial Iran diplomat from UN post

    Read more

  • Astronomers discover Earth-like planet that could support life

    Read more

Asia-pacific

Major Vietnamese bank in turmoil after founder’s arrest

©

Text by News Wires

Latest update : 2012-08-23

Nervous Vietnamese crowded the branches of one of the country’s major banks Thursday to withdraw some $240 million following news of the arrest of the bank’s founder (photo) on fraud charges. The stock market was also hit by the news.

REUTERS - A major Vietnamese bank founded by arrested tycoon Nguyen Duc Kien faced a run on deposits on Thursday, witnesses said, but the central bank has injected funds into the banking system and assured jittery residents their money is safe.

Monday’s arrest of Kien, 48, sent shockwaves through the Communist-run country, triggering a 9.2 percent slide in the stock market this week and causing depositors to pull funds from Asia Commercial Bank (ACB), one of Vietnam’s biggest lenders, which Kien helped found in 1994.

Withdrawals began on Tuesday when the arrest was made public. By Thursday, crowds had formed at ACB’s branches in Ho Chi Minh City, Vietnam’s business centre, residents said. At one branch, depositors shoved tables aside to try to reach bank tellers, a witness said.

The central bank said the entire banking sector “will commit to standing ready to provide, funding support to ACB to ensure it meets its obligations for repaying deposits”.

It pumped 13 trillion dong ($624 million) into the banking system on Wednesday and another 4 trillion on Thursday.

Outside ACB’s headquarters, two dozen cars lined up and about 70 depositors crowded the transaction office, a witness said, as confidence dwindled in the financial system of what a few years ago was one of world’s hottest emerging markets.

“I have some cash in ACB but since the bank belongs to the same system controlled by the central bank, it does not mean much to withdraw cash from one bank to put it in another, as all in the system face the same risk,” one ACB depositor said in a telephone interview from Ho Chi Minh City.

The bank’s chief executive officer, Ly Xuan Hai, widely believed to be detained by police, had submitted his resignation, ACB said late on Thursday.

He was replaced by Deputy Chief Executive Officer Do Minh Toan, who has been running the bank this week and told state media earlier that depositors took out 5 trillion dong ($240 million) from ACB on Wednesday. As of June 30, the bank’s deposits totalled 145.62 trillion dong ($7 billion), up 2.4 percent from a year earlier, according to the bank.

Kien, a well-connected tycoon and one of Vietnam’s highest-profile bankers, held less than 5 percent of ACB’s stock. The government said he played no part in managing the bank, which is 15 percent owned by British bank Standard Chartered Plc.

Kien is chairman of B&B Investment and Trade Joint Stock Co, ACB Hanoi Investment Joint Stock Co and Asia Hanoi Financial Investment Co, and the alleged violations concerned these firms, the police ministry said.

He was accused of running unlicensed businesses. His three companies were established to invest in real-estate projects while they raised funds and invested the proceeds in bank shares instead, state media said.

Gold prices jump, currency falls

Economists were already worried about the fragility of Vietnam’s banking system and some Vietnamese have quickly turned to the traditional safe haven of gold: bankers said demand had jumped from Monday, pushing up the retail price by about 5 percent.

The dong has fallen 0.3 percent since Monday against the dollar.

The main stock market has slid for three consecutive days, trading at a six-month low on Thursday when it lost 4.5 percent. On Tuesday, it posted its biggest daily loss since October 2008. ACB’s stock price has slumped 18.6 percent this week, losing 6.7 percent on Thursday. The bank is valued at about $1 billion.

But some experts doubted the panic would spread.

“I wouldn’t think we are going to see a lot of contagion,” said Jonathan Pincus, dean of the Fulbright Economics Teaching Program in Ho Chi Minh City and a former Vietnam economic specialist at the United Nations.

“The State Bank acted quickly and provided liquidity immediately,” he added.

The banking sector has been hit by high inflation and rising bad debt stemming from losses at big state firms in particular. At the end of March, 8.6 percent of all loans in Vietnam were bad, the highest in Southeast Asia, central bank data showed.

Pincus and other experts said ACB should weather the crisis but that plenty of other Vietnamese banks remain in difficulty.

“The immediate problems are for those banks that are heavily overextended in the property market and which are owned by one or two families or groups. Those banks, of which there are many, are very vulnerable. But ACB is not one of those,” said Pincus.

Bankers said ACB and several small banks had been borrowing short-term funds on the interbank market to ensure liquidity. The fixing on overnight dong loans eased to 7.14 percent on Thursday after surging to 7.5 percent the previous day from 4 percent at the start of the week, Reuters data showed.

Deputy CEO Toan was quoted in state media as saying the volume of cash withdrawn from ACB was higher on Wednesday than Tuesday. Toan, who is in charge of the bank in the absence of the CEO, said ACB could access up to 46 trillion dong ($2.2 billion) if needed.

It had borrowed 10 trillion dong from the central bank on Aug. 21-22 and could also gradually withdraw 36 trillion dong from the interbank market, Toan said. That is about a third of the total weekly transactions on the interbank dong market of between 110 trillion and 130 trillion dong over the past month.

Kien’s family is ranked fifth among Vietnam’s 30 richest families in terms of stock market holdings, based on a list compiled by online news website VNExpress. He is also deputy chairman of the Vietnam Professional Football Joint Stock Co, which runs Vietnam’s top-tier professional soccer league.

Date created : 2012-08-23

Comments

COMMENT(S)