Vietnamese lender DongA Bank (DAB) released a statement on Wednesday declaring that it will continue to operate as normal in spite of a recommendation by police that its former CEO be prosecuted for financial crimes.

Online rumors were quick to spread after news broke that Tran Phuong Binh, the DAB CEO from 1998 until leaving the position to serve as deputy chairman of its board in 2015, is facing prosecution for mismanagement that led to a VND3,405 billion (US$150 million) loss for the lender.

Binh was suspended from participating in all DongA Bank activities in August 2015 and was arrested in November 2016 to serve an investigation into the bank’s losses. 

Among the 20 other defendants named in the case are two former deputy CEOs of DAB, Nguyen Thi Ngoc Van and Nguyen Thi Kim Xuyen, and several former directors of the bank’s branches and transaction offices.

On Wednesday afternoon, DAB released an official statement, asserting that the rights and interests of its customers will remain a top priority while the bank continues its normal operations.

“The upcoming prosecutions of former executives are not new events. They are simply the next step of the legal actions launched in late 2016,” the statement reads.

“[The recommendation] will therefore leave no immediate or future impact on our operations.”

Ex-CEO of DongA Bank Tran Phuong Binh. Photo: Tuoi Tre

The State Bank of Vietnam (SBV), the country's central bank, placed DAB under special supervision on August 13, 2015 “for violations in financial management and credit grants” committed by several of its executives.

Nguyen Hoang Minh, deputy director of SBV’s Ho Chi Minh City branch, told Tuoi Tre (Youth) newspaper on Wednesday that DongA Bank is still working to have the special supervision lifted.

“Declaring bankruptcy is not among the plans DongA Bank has proposed to the central bank for its restructuring,” Minh underlined, squashing rumors of its insolvency.

Minh added that no bank run has occurred at DAB in the wake of the suggested prosecution.

“The amount of savings at DAB remains unchanged and there is no bank run. All activities are in their normal state,” he said.

The State Bank of Vietnam will report the proposed restructuring plans for DongA Bank to the government for final approval. The special supervision mechanism will be lifted if the plans are backed.

All 21 defendants in the mismanagement case at DongA Bank now face charges of “deliberately acting against state regulations on economic management that resulted in serious consequences.”

Ex-CEO of DongA Bank Tran Phuong Binh. Photo: Tuoi Tre

Binh was the leader of a group of shareholders which collectively held a 10.25 percent stake in the lender. Another group comprised of Binh’s relatives owned 7.7 percent of the bank.

Investigators have found that Binh had instructed others to manipulate the credit institution’s banking and monetary operations through fraudulent loan payments and grants that resulted in VND3,405 billion worth of damages.

Binh’s violation was the primary vehicle behind DAB’s accumulated losses of VND31 trillion ($1.37 billion) and negative equity of over VND25 trillion ($1.1 billion) by late 2015, according to officials.