VietNamNet Bridge - Banks’ share prices began to drop after rumors about the poor performance of commercial banks following the news that Dong A Bank has been put under special control.

The VN Index unexpectedly fell on August 17 by 15.88 points, or 2.7 percent to 573.15 points, with bank shares sold and prices tumbling. 

EIB and CTG unexpectedly saw prices falling to floor levels. EIB closing price dropped by 6.7 percent to VND12,600 per share, while CTG price decreased by 6.76 percent to VND19,300 per share.

Meanwhile, BID price also decreased by VND1,400 to VND21,000 per share and VCB lost VND2,300 to VND41,000 per share.

Nguyen The Minh from Ban Viet Securities Company said on Nguoi dong hanh that bank share prices were sliding because of the news about banks’ performance.

The State Bank late last week announced that it had put Dong A Bank under special control. Investors said that other banks would ‘have the same fate as Dong A’s’ and would rush to bargain bank shares away, including shares of profitable banks.

Rumors have spread that Eximbank has been put under special control, which forced the bank’s share price down.  An official of the State Bank on August 17 confirmed with Thoi Bao Kinh Te Sai Gon that the State Bank’s inspectors were still working with Eximbank and no final decision has been released.

Prior to that, local newspapers had reported that Eximbank’s board of management was questioned at the shareholders’ meeting held earlier this year about the profit decreases and bad debt increase. 

The State Bank still has not ratified the key personnel structure of Eximbank. These factors all have raised concerns among investors. 

An Eximbank senior executive said the State Bank plans to send its representative to the bank’s board of directors. An extraordinary shareholders’ meeting will be organized in mid-September where the personnel structure will be determined. 

Minh said that what is happening in the market shows the investors’ habit of ‘following the crowd’. 

Investors fear that after Dong A, the State Bank would put other banks under special control, which would cause the share prices of the banks to fall as well.

He thinks the bank share price falls will not last a long time.

In the latest news, Phu Nhuan Jewelry Company’s (PNJ) shareholders have lost trillions of dong because of the ‘Dong A syndrome’. PNJ share prices dropped by 28 percent from late July to August 17.

PNJ now holds 7.7 percent of Dong A’s shares, worth VND385 billion.

US$1 = VND22,000

Thanh Mai