State Audit "urges" mandatory transfer
As VietNamNet reported, in the Audit Report on the Socio-Economic Recovery Program recently sent to the National Assembly Standing Committee and National Assembly deputies, the State Audit recommended that the State Bank must compulsorily transfer Dong A Commercial Joint Stock Bank (Dong A Bank) to another bank because Dong A Bank has negative equity.
It should also be added that DongA Bank is one of four weak credit institutions that the State Bank of Vietnam (SBV) has submitted a mandatory transfer plan from the beginning of 2022 (along with OceanBank, GPBank, CBBank).
However, the handling of weak banks is only at the stage where the Government has approved the compulsory transfer policy, and is in the stage of determining the value of the enterprise proposed for compulsory transfer. Some banks have just been approved by the Government for compulsory transfer policy, but their financial situation is difficult, specifically: high bad debt and outstanding assets, negative equity, accumulated losses continue to increase, and do not meet the regulations on safety in banking operations. Some banks have high potential risks, causing system insecurity.
DongA Bank has been under special control by the State Bank of Vietnam since August 14, 2015. This bank has a charter capital of VND5,000 billion, a figure that has not changed since 2014. Of which, the equity capital of legal shareholders accounts for 40.68% of DongA Bank's charter capital.
Based on the list of shareholders updated on December 31, 2014, the legal entities with large ownership include: Bac Nam 79 Construction JSC (owned by Phan Van Anh Vu, also known as Vu "nhom") holding 10% of charter capital; Phu Nhuan Jewelry JSC (7.7%); Ho Chi Minh City Party Committee Office (6.9%); Ky Hoa Tourism and Trade LLC (3.78%); An Binh Capital JSC (2.73%); Phu Nhuan Housing Construction and Trading LLC (2.14%).
Also from 1:00 p.m. on August 14, 2015, all DongA Bank shareholders are not allowed to transfer DongA Bank shares according to the direction of the Special Control Board.
The current Board of Directors of DongA Bank includes Mr. Nguyen Thanh Tung (Chairman of the Board of Directors), Mr. Nguyen Ngoc Tam, Mr. Nguyen Dinh Truong, Mr. Tran Van Dinh and Mr. Huynh Phuong.
Of which, Mr. Nguyen Dinh Truong and Tran Van Dinh are the ones who own 66,583 shares (0.013%) and 700,000 shares (0.140%) at DongA Bank, respectively.
Related persons of the two individuals include Mr. Truong's son, who currently owns 21,541 shares (0.004%); Mr. Tran Van Dinh's wife (Ms. Hoang Thi Xuan) currently holds 5.07 million shares (1.015%), and Mr. Dinh's daughter also holds 366,422 shares (0.004%).
How has DongA Bank performed over the past 10 years?
Since being placed under special control, DongA Bank has not publicly disclosed its financial statements. The most recent financial statement published by the bank was in 2014, before the bank was placed under special control.
The 2014 financial report shows that DongA Bank had total assets of more than VND87,100 billion as of December 31, 2014. However, pre-tax profit only reached more than VND26 billion, a sharp decrease compared to the profit of VND328 billion in 2013.
Since then, information about this bank's business results has been kept secret.
In a rare disclosure of information in March this year, DongA Bank shared its 2022 operations with positive indicators. Capital mobilization from customers reached 98% of the 2022 plan, of which savings deposits alone increased by 11% compared to the beginning of 2022.
“The source of medium and long-term deposits continues to be maintained (at a rate of nearly 42%), helping DongA Bank ensure a sustainable source of capital to develop business activities, ensure liquidity safety, minimize risks affecting the bank's operations, and the payment capacity ratios are always higher than the regulations of the State Bank. In 2022, outstanding loans reached 102% of the 2022 plan,” quoted from DongA Bank's announcement.
Although it has not published financial reports for many years, DongA Bank still regularly publishes annual management reports.
According to the 2022 management report, the most recent report published by the bank, the Board of Directors of DongA Bank reported on the main activities of the Board of Directors in 2022. Through this content, we can partly see the operating situation of DongA Bank.
In 2022, the Board of Directors has carried out activities such as maintaining stable business operations of the entire Dong A Commercial Joint Stock Bank system; Maintaining and ensuring liquidity for the bank. After many years of decline, outstanding loans in 2022 have maintained growth momentum from the first months of the year, contributing to significantly improving DAB's interest income.
Accelerate the recovery and handling of risks, debts sold to VAMC, bad debts, new bad debts arising since 2016, and problem loans that have not been promptly handled in 2021 on the principles of prudence, clarity, publicity, and transparency. Improve asset quality, reduce non-performing assets, and help free up some of the bank's remaining capital.
Bank leaders direct and monitor the bond issuance situation of credit institutions and advise on bond investment to supplement DAB's valuable papers portfolio and contribute to effective capital use.
Focus on risk management such as: Adjusting some risk appetites and issuing the 2nd Risk Appetite Regulations in accordance with the law. Amending and supplementing the 2nd Regulations on organization and operation of the Risk Management Committee in accordance with the law and the actual situation.
Legal regulations on compulsory transfer of commercial banks According to the provisions of the Law on Credit Institutions amended and supplemented in 2017, credit institutions falling into one of four cases: losing or at risk of losing the ability to pay or losing or at risk of losing the ability to pay according to the regulations of the State Bank; the accumulated loss of the credit institution is greater than 50% of the value of the charter capital and reserve funds recorded in the most recent audited financial statement; failing to maintain the prescribed capital safety ratio for 12 consecutive months or the capital safety ratio is lower than 4% for 06 consecutive months; being ranked poorly for 02 consecutive years according to the regulations of the State Bank will be considered and decided by the State Bank to be placed under special control. When a credit institution is under special control, it may be restructured by the Government, the Prime Minister or the State Bank according to one of the following options: recovery; merger, consolidation, transfer of all shares and capital contributions; dissolution; compulsory transfer; and bankruptcy. In which, the compulsory transfer plan is the plan in which the owner, capital contributor, and shareholder of the commercial bank under special control must transfer all shares and capital contributions to the transferee. (Clause 38, Article 4, Law on Credit Institutions). The transferee is a domestic credit institution, foreign credit institution, or other investor that has requested to receive a compulsory transfer and has been decided by a competent state agency to receive a compulsory transfer. (Clause 39, Article 4, Law on Credit Institutions). |
Source
Comment (0)