Politics hobbles change in Vietnam
Following the arrest of the main shareholder of Vietnam’s Asia Commercial Bank, Nguyen Duc Kien, the Vietnamese government has introduced a state-owned asset management company to clean up the country’s opaque banking sector. But how committed to change is Vietnam’s leadership?
In 2011, Nguyen Duc Kien was considered one of Vietnam’s richest and most powerful businessmen. The co-founder of Asia Commercial Bank (ACB) and the deputy chairman of the Vietnam Professional Football company, Kien was a well-respected figure.
A year later, this high-flyer experienced a fall from grace. In August 2012, he was arrested on suspicion of ‘economic violations’ relating to a number of dubious-looking investments and business ventures that he had been involved in.
In July this year, Kien was additionally charged with tax evasion. On the back of the scandal Fitch Ratings affirmed a negative outlook for ACB. According to the ratings agency, the full extent of Kien’s fraudulent actions is yet to be exposed. Kien also owns shares in other prominent banks in Vietnam, including Sacombank, Eximbank and VietBank.
"After the news broke about Kien, depositors panicked and withdrew hundreds of millions of dollars from ACB. But liquidity in the system actually remained unchanged," says Ivan Tan, director of financial services ratings at Standard & Poor’s in Singapore. "Despite the bank run, depositors withdrew their money from ACB only to put it in other state-owned or domestic banks."
But although the incident didn’t damage liquidity, it did expose structural problems in Vietnam’s banking sector.