VietNamNet Bridge - Dong A Bank CEO Tran Phuong Binh said a foreign investor wants to buy a 49 stake to become a strategic shareholder of the bank. If the deal succeeds, Dong A will be added to the list of commercial banks that can restructure without help from the State Bank.

 

Dong A has become a hot topic in local newspapers after Binh said at the 2015 shareholders’ meeting that Kido, a sweets manufacturer, planned to pour VND1 trillion into Dong A Bank in its restructuring strategy.

The information about Kido’s investment in Dong A pushed Dong A’s share prices up from VND3,500 per share to VND4,700. It was expected that Kido would buy Dong A’s shares at VND10,000 per share.

However, Thoi Bao Kinh Te Sai Gon on August 3 quoted sources as saying that Kido has decided not to buy VND1 trillion worth of Dong A Bank’s shares as initially reported.

The sources said the buyer canceled its plan because of Dong A’s financial situation that needs to be fixed, and because Kido thinks it is not the right time to invest in Dong A.

A senior official of the State Bank of Vietnam said in the same newspaper that the State Bank has not received any report from Kido about a plan to invest in Dong A. The official said the possibility of Kido buying Dong A’s stake was ‘very low’.

Dong A had difficulties in doing business in 2014. The bad debt ratio by December 31, 2014 was VND1.947 trillion, or VND170 billion lower than 2013, but still accounted for 3.76 percent of the total outstanding loans of the bank.

Meanwhile, Nguoi Lao Dong reported that Binh said on August 13 that under the plans of restructuring Dong A approved by the State Bank, Kido could only become an investor of Dong A, but not strategic investor. 

This is because Dong A plans to increase its chartered capital to VND10 trillion, which would make Kido’s VND1 trillion account for 10 percent of Dong A’s capital.

Binh revealed that a foreign investor has expressed its willingness to buy 49 percent of Dong A Bank’s shares. The investor promised it will provide financial support to deal with bad debts to restructure the bank.

If the deal is made, the foreign investor would pour VND4.9 trillion into Dong A Bank.

Binh affirmed that the State Bank has turned the green light on Dong A’s plan to welcome a foreign strategic shareholder. 

“If everything goes smoothly, the result will be announced in three to four months,” Binh said.

C.bank scrambles to appease DongABank clients

The central bank has been quick to appease nervous customers of DongABank since it placed the HCMC-based commercial joint stock bank under special surveillance last Thursday, saying it will guarantee sufficient liquidity for the troubled bank.

Nguyen Kim Anh, deputy governor of the State Bank of Vietnam (SBV), told Vietnam Television (VTV) station that DongABank clients, especially individual ones, should not worry about their cash and gold deposits as the SBV is on hand to help the bank.

Concerned about the DongABank situation, clients were seen coming to some of the bank’s transaction offices last Saturday getting back their deposits before maturity or exploring the situation of the bank.

Deputy governor Anh affirmed DongABank could repay cash and gold deposits of customers as the central bank has resources to intervene.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said business was as usual at DongABank last Saturday.

Anxious residents rushed to the bank to withdraw their deposits and their requests were met. In the Daily’s observation Saturday morning, the number of customers at DongABank’s transaction offices was around 30% higher than on normal days. Some clients came to take out their savings or transfer them to other banks.

Some others told the Daily that they just came to see how the bank was. Having seeing the bank’s operations were as usual, they decided not to withdraw money.

Negative news about banks no longer leads to massive cash withdrawals as seen in the past thanks to the central bank’s proactive measures.

Nguyen Hoang Minh recommended people not take back their deposits prior to maturity, otherwise they would only get non-term interest which is very low. The SBV has taken prompt measures to provide adequate liquidity for DongABank and ensure its normal operations. Deposits will be fully repaid upon request, Minh stressed.

The decision to put DongABank under special surveillance is part of the central bank’s plan to restructure the struggling bank, keep it in business, and most importantly, protect the interests of depositors.

Senior executives at DongABank will be dismissed or suspended over their alleged involvement in the irregularities that have spelled trouble for the bank.

According to a central bank statement, DongABank had violated regulations on financial management, credit and other business activities in the years before 2012, which seriously affected its financial position.

The SBV said it would dismiss or suspend many of DongABank’s leaders and coordinate with law enforcement agencies to deal with those having caused losses.

People from the Bank for Investment and Development of Vietnam (BIDV) would be picked to take the helm of the ailing bank to help steer it away from troubles.

The central bank will restructure DongABank so that its operations can soon return to normal.

DongABank has faced difficulties over the years, according to its general meeting held late last month. The bank obtained consolidated net profit of VND26.9 billion (US$1.2 million) and after-tax profit of VND21.4 billion last year.

Bad debts at the bank had amounted to some VND1.95 trillion as of the end of 2014, falling VND170 billion against 2013 but making up 3.76% of its total outstanding loans. SGT

Kim Chi