VietNamNet Bridge – The Vietnamese banking system experienced a stormy year 2012. However, no collapse or disaster occurred.

High bad debt ratio made public

The bad debt ratio of the Vietnamese banking system by October 2012 had reached 8.82 percent, the highest ever rate. If noting that the total outstanding loans are estimated at 2700 trillion dong, then banks now bear 240 trillion dong worth of bad debts.

However, foreign finance institutions believe that the actual bad debt ratio, if calculating in accordance with international standards, would be higher than the announced level of 8.82 percent.

ACB had an unlucky year 2012

A series of former managers of the Asia Commercial Bank (ACB) were arrested and prosecuted in 2012 because they were believed to get involved in illegal investment authorization activities.

After Nguyen Duc Kien, Deputy Chair of the founding council of ACB was arrested, the stock market vibrated with shares bargained away.

After Kien, Ly Xuan Hai, former General Director of ACB, was prosecuted. Tran Xuan Gia, former President of ACB and three former Deputy Chair Le Vu Ky, Trinh Kim Quang and Pham Trung Cang, one after another, resigned from their posts due to the involvements in wrongdoings.

ACB, one of the most powerful commercial banks in Vietnam, has also suffered another pain: it has incurred the loss of 1.7 trillion dong from gold trading.

The takeover of Sacombank

Rumors were spread in late 2011 that a group of shareholders attempted to collect Sacombank shares to take over the bank. In February 2012, the group of shareholders officially showed up when President of Eximbank Le Hung Dung, representing the group of shareholders who held 51 percent of Sacombank’s stakes, called for a re-election of the leadership of Sacombank.

The takeover wrapped up in May 2012, when eight of the 10 new members of Sacombank’s board of directors came from Eximbank and Phuong Nam Bank.

However, Sacombank is still “hot” in the market. Some big shareholders of Sacombanks on the last days of 2012 sold Sacombank shares in big quantities after they themselves scrambled for the shares. Dang Van Thanh, who deserves credit for developing Sacombank into a powerful bank, and his son Dang Hong Anh, both have resigned from the posts of the members of Sacombank’s board of directors.

Interest rates down five times, credit got stuck

The short term deposit interest rates have decreased five times in 2012 in March, April, May, June and December from 14 percent on 8 percent. Meanwhile, long term deposit interest rates have been floating.

Foreign financial institutions have advised Vietnam to take cautious steps in the plan to ease the interest rates to rescue businesses. They believe that the more reasonable time for the interest rate reduction is the first quarter of 2013.

Despite the interest rate reductions, now hovering around 12-15 percent, the disbursement has been going very slowly. It is estimated that the credit grew by 5-6 percent in 2012, while the average credit growth rate was always high at 30 percent in previous years.

The biggest M&A deal in the banking sector

Vietinbank, one of the biggest commercial banks in Vietnam, has announced the sale of 20 percent of its stake to Japanese Tokyo-Mitsubishi UFJ at 24,000 dong per share. With the total value of 743 million dollars, this is believed to be the record biggest M&A deal in the banking sector.

Dong/dollar exchange rate stabilized, dong regains its value

Stabilizing the dong/dollar exchange rate was considered the biggest achievement of the State Bank of Vietnam in 2012.

In early 2012, Governor of the State Bank--Nguyen Van Binh, affirmed that the dong would not depreciate by more than three percent in 2012, and this has come true.

Compiled by C. V