Agence France-Presse — Getty ImagesA branch of Asia Commercial Bank in Hanoi.
HONG KONG — Police in Vietnam have arrested the former head of one the country’s biggest banks, state media said Friday, as the fallout from a banking scandal continues to spread.
The ministry of public security’s investigation department arrested Ly Xuan Hai, who had resigned as general director of the Asia Commercial Bank, ‘‘for allegedly violating state regulations on economic management leading to serious consequences,’’ the state-owned Vietnam News Service reported on Friday.
The arrest of Mr. Hai, 47, which took place on Thursday when the police searched his home and office, is the latest development in a brewing banking scandal that has already this week toppled a co-founder of the bank, prompted a broad sell-off in Vietnam’s stock market and forced the Communist-run country’s central bank to step in and help fend off a run on deposits at Asia Commercial Bank.
The trouble at the bank began on Tuesday, when news broke that authorities on Monday had arrested the bank’s co-founder and former vice chairman, Nguyen Duc Kien, an influential local businessman who retained stakes in several banks and other businesses and who is also a soccer aficionado who served as the general manager of the Hanoi Football Club.
Asia Commercial Bank, in which Mr. Kien, 48, retains a stake but no longer has any management role, had tried to distance itself from his arrest for what it described as ‘‘his own personal wrongdoings in business.’’
The bank, 15 percent owned by the British bank Standard Chartered, 7.3 percent by the Hong Kong-based conglomerate Jardine Matheson Holdings and 6.8 percent by the Vietnam-focused investment and fund manager Dragon Capital, said in a statement Tuesday that the arrest of Mr. Kien ‘‘has no impact on A.C.B.’s financial position, its decision-making process and its operations.’’
But despite that reassurance, pledges of liquidity from the central bank and calls for calm from the securities regulator, investors and customers fled.
By Friday, shares in the bank had fallen 16 percent over the previous week. The broader Ho Chi Minh Stock Index also fell, ending the week down 7.8 percent as companies associated with Mr. Kien were especially hard hit.
Customers lined up to withdraw their money from the bank’s branches on several days during the week. The new bank chief, Do Minh Toan, who was appointed to replace Mr. Hai, told state media that customers withdrew around 5 trillion Vietnamese dong, or $240 million, worth of deposits on Wednesday alone. The bank had 146 trillion dong in customer deposits at the end of June, according to filings.
Article source: http://dealbook.nytimes.com/2012/08/24/fallout-continues-at-vietnamese-bank/?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.