Vietnam bank mogul's arrest spooks investors
Posted: 21 August 2012 1708 hrs
Banking tycoon Nguyen Duc Kien has been arrested on suspicion of illegal business activities. (AFP PHOTO/STR)
HANOI: Vietnam said Tuesday it had arrested a top banking tycoon for illegal business activities, sending ripples through financial markets as the central bank urged the public not to panic.
Nguyen Duc Kien, 48, a shareholder in some of Vietnam's largest financial institutions, was taken into custody late Monday after police raided his Hanoi home and seized documents.
"Kien was arrested for illegal business activities," according to an announcement posted on the government's official website.
Multi-millionaire Kien is a founder of Asia Commercial Bank (ACB), one of the largest banks in Vietnam, which counts global banking giant Standard Chartered as one of its "strategic partners".
His arrest sent "shockwaves across the country", according to the state-run Tuoi Tre newspaper.
It also triggered fears of a bank run which could hurt a banking sector struggling with toxic debts, falling profitability and liquidity problems owing to credit tightening by the authorities aimed at taming inflation.
The governor of the State Bank of Vietnam, Nguyen Van Binh, said Tuesday that he was aware of the risk of a fallout from Kien's arrest and that the central bank stood ready to intervene.
"To ensure the safety of the whole system, the State Bank of Vietnam has measures available to ensure liquidity for ACB and other banks if there is a mass withdrawal (of money from banks)", he said in a televised speech.
Binh said the arrest was not related to the ACB, but concerned accusations of wrongdoing at three smaller financial companies where Kien is chairman.
Several ACB branches in the capital Hanoi visited by AFP on Tuesday appeared normal with no signs of mass withdrawals by panicked customers.
ACB issued a statement Tuesday saying Kien's arrest would not impact its performance, even as its share price slumped on the Hanoi Stock Exchange.
Bank spokesman Nguyen Thanh Toai described the arrest as "a personal issue".
"The detention of Kien is the decision of the authorities so it does not affect the normal operation of the bank," Toai said, adding that Kien held less than five percent of shares in the group.
ACB's share price plunged almost seven percent to 24,100 Vietnam dong ($1) by the close on Tuesday on the Hanoi Stock Exchange, dragging down the wider market.
The benchmark HNX index ended down 3.7 points or 5.24 percent.
Kien is said to hold shares in ACB, Sacombank, Eximbank, VietBank and others and was reportedly involved in drafting the country's new bank reforms.
Eximbank and Sacombank were quick to stress that Kien was not a major shareholder in their institutions, according to media reports.
The banker rose to public prominence as a vocal critic of corruption in Vietnamese football, using his role as chairman of Hanoi Football Club to sound off against Vietnam's Football Federation.
His arrest comes as the communist party broadens an anti-corruption drive launched last month, said Vietnam expert Carl Thayer, emeritus professor at the University of New South Wales in Australia.
The ruling party wants to demonstrate that it is tackling high-level corruption, he told AFP, adding "the atmosphere for some reason is just right for going after big fish".
Kien's arrest may also signal deep political infighting among the country's elite -- a sign of a "subterranean battle" between rival factions aligned to the prime minister and the president, he said.
Some of the elite may be concerned that Prime Minister Nguyen Tan Dung has amassed too much power "and needs to be pulled back in a peg," he said.
If so, this could explain the attack on Kien -- who is seen as being aligned with Prime Minister Dung and is the subject of speculation on blogs over his business dealings with Dung's daughter, Thayer added.
- AFP/xq/ac
source:
http://www.channelnewsasia.com/stori...221262/1/.html
Reply With Quote
Bookmarks