Vietnam’s state-run lender to operate loss-making bank acquired by cbank
Tuesday, February 03, 2015, 09:40 GMT+7
Vietcombank, the fourth biggest bank of Vietnam by assets with VND530.22 trillion (US$24.9 million), has been asked by the State Bank of Vietnam (SBV) to manage and operate loss-making Vietnam Construction Joint Stock Commercial Bank (VNCB) after the SBV took over it.
The participation of Vietcombank will ensure the smooth implementation of the restructuring process, according to the SBV.
The central bank on Monday announced that it had become the new owner after acquiring 100 percent stakes of the VNCB, terminating all rights and interests of the latter's shareholders.
Its move followed the failure of VNCB shareholders to supplement more funds to ensure the real value of the bank’s minimum charter capital of VND3 trillion.
According to a recent announcement from the central bank, the commercial lender organized an extraordinary general meeting last Saturday in the southern province of Long An.
The general meeting issued its resolution disapproving a recapitalization plan to help ensure the bank’s minimum charter capital complies with the central bank’s regulation.
Pursuant to the Law on Credit Institutions and the SBV’s Decision No. 48/2013 / QD-NHNN dated January 8, 2013 on the capital contribution required to purchase shares of those credit institutions under special control and the resolutions of the VNCB’s general meeting, the central bank announced the decision to mandatorily repurchase the entire stakes of the commercial bank at the price of VND0 (zero) per share.
The SBV has affirmed that the legitimate rights and interests of VNCB depositors will continue to be guaranteed in accordance with the law.
Nguyen Phuoc Thanh, Deputy Governor of the State Bank of Vietnam, told newswire Dau Tu Chung Khoan that the SBV’s move in nationalizing the VNCB followed the requirement of the Politburo and the central government to ensure the country’s social and political stability in the present time.
For financial companies, if necessary, the central bank will let them go bankrupt in accordance with the law because they do not affect many people, Thanh said, adding that for the banking system, the SBV will try its best to allow no bank to declare bankruptcy.
"It is better to lose money from the state to gain socio-economic stability than let people lose their money, as it will lead to the loss of confidence, social unrest, and many other problems and the cost will be much higher,” he said.
“Therefore, the central bank will continue to execute the same plan for commercial banks, just in case,” Thanh added.
The central bank’s acquisition of the VNCB will help the lender strengthen and restore operations but the primary purpose is to raise money to pay its depositors who wish to withdraw their deposits, he said.
Concerning Vietcombank's effort to participate in the restructuring of the VNCB, the deputy governor said it is quite time-consuming.
However, the role of a state-run institution like Vietcombank is completely different from a private organization as it has to make profits while supporting the economy when necessary, he said.
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In late July 2014, the Ministry of Public Security arrested three former senior officials at the VNBC including Pham Cong Danh, 49, Phan Thanh Mai, 43, and Mai Huu Khuong, 31, for criminal investigation into their alleged violation of state economic regulations. Preliminary probes found the three people’s wrongdoing amounting to VND6.6 trillion ($311 million). In late May 2013, the VNCB was established to replace TrustBank. The construction bank offers unique banking services to corporate clients active in production, trading of building materials, and low-cost housing development. The bank’s charter capital was VND3 trillion with total assets of over VND28 trillion. |
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