Tran Xuan Gia, chair of big Vietnamese lender, resigns
Head of Asia Commercial Bank, two deputies step down amid investigation over alleged improper lending that has jolted the economy
Three executives at a large Vietnamese bank have resigned amid a deepening investigation into a scandal that has shaken investor confidence in the country.
Vietnam's crowded banking sector is believed to have bad debts of up to 10 per cent of outstanding loans and is one of the greatest risks to a once booming economy now slowing. The government has pledged to restructure the sector, but there are doubts it has the will to do so.
Last month, ACB's former chief executive Ly Xuan Hai and Nguyen Duc Kien, a superwealthy founder of the bank, were arrested for "improper lending", causing a run on the bank and a large drop in the country's stock market. The arrests triggered speculation of a damaging power struggle with the country's normally secretive political and economic elite.
ACB said the executives had resigned for approving a decision by Hai to allow staff to withdraw US$34 million to deposit in another bank. It gave no further details.
The bank said it had appointed a new chairman and two deputies, including a representative of Standard Chartered which owns 15 per cent of ACB's shares.
The changes were aimed at "consolidating the management strength, enabling ACB to assert its position as a leading joint stock bank in Vietnam", it said.
It is unclear whether the executives will face criminal charges.
Stocks on Vietnam's benchmark index fell, extending their slide to 11 per cent since police arrested Kien.
"From a market perspective, the recent uncertainty shows no signs of ending," said Fiachra MacCana, managing director of Ho Chi Minh City Securities. "Resignations from the boards at these banks are likely to add fuel to that fire over the next couple of weeks."
Vietnam's bonds declined, pushing the five-year yield to the highest level in two months. "Market sentiment is quite cautious now, given those arrests and resignations of bank officials," said Hoang Thanh Tam, the head of the fixed-income department at Vietnam Maritime Commercial Joint Stock Bank in Hanoi. "Investors will hold off to see how these events impact the financial sector and the economy."
The scandal adds to challenges for Prime Minister Nguyen Tan Dung's government as it seeks to shore up a banking system saddled with the highest bad debt in Southeast Asia. Economic growth slowed to 4.4 per cent in the first half as lending stagnated, damping state revenue and company profits.
ACB has taken legal action against VietinBank to secure the return of its deposits, Tran Mong Hung, former chairman and now adviser to the management board, said.
Vietnam would clean up its banking system and any individuals found in violation would be dealt with strictly, leaving "no restricted areas", Government Office chairman Vu Duc Dam said.
