Vietnam markets lose $4 billion after bankers’ arrests

Posted on August 24, 2012

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The combined market capitalisation of the Hanoi and Ho Chi Minh City exchanges dropped by $3.85 billion by Thursday (AFP, Hoang Dinh Nam

HANOI — Vietnam’s stock markets have lost nearly $4.0 billion in value after two top bankers were arrested this week in a widening police probe into the banking sector, state media said Friday.

Both the founder and former director general of Asia Commercial Bank were arrested this week for economic crimes, triggering a run on deposits and forcing the central bank to provide emergency liquidity to the institution.

The combined market capitalisation of the Hanoi and Ho Chi Minh City exchanges had dropped by $3.85 billion by Thursday, the Tuoi Tre newspaper reported, prompting the Securities Commission to call for calm.

The arrest of Ly Xuan Hai late Thursday for “deliberate wrongdoing causing serious consequences” came just hours after the Asia Commercial Bank announced he had resigned from the position of director general, Thanh Nien reported.

Hai’s arrest deepened the problems facing ACB, which has seen its share price dive nearly 20 percent and had jittery depositors withdraw at least $384 million since its flamboyant founder was arrested Monday.

Multi-millionaire Nguyen Duc Kien, 48, a shareholder in some of Vietnam’s largest financial institutions and one of the founders of ACB, was detained for “illegal business activities” after police raided his Hanoi home.

One banker based in Ho Chi Minh City said the authorities were trying to “ring fence” the ACB from the scandal, but others warned it would be hard to restore public trust in the institution.

The $384 million in withdrawals by depositors was recorded over Tuesday and Wednesday, the ACB’s new director general Do Minh Toan said according to state media reports.

The bank counts global banking giant Standard Chartered as one of its “strategic partners”.

ACB branches in Hanoi visited by AFP on Friday appeared normal, with no signs of panicked investors withdrawing deposits.

The central bank had previously said Kien’s arrest was not related to the ACB — where he holds a less than five percent stake — but concerned accusations of wrongdoing at three smaller financial companies where he is chairman.

But the arrest of Hai, who worked at the ACB for 15 years, will make it harder to maintain this distinction, experts told AFP.

The central bank pumped more than $600 million into the banking system Wednesday — double the sum of Tuesday’s intervention — according to official data.

AFP

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Posted in: Corruption, Economy