Arrest, fraud and gold ban cause ACB to lose $451 mln

Total assets of Asia Commercial Joint Stock Bank lost some VND9.4 trillion ($451.34 million) in 2012 due to the arrest of financial mogul and bank co-founder Nguyen Duc Kien, the ban on gold mobilization and lending, and the VND719 billion loss caused by a swindler.

The three reasons were summed up by Tran Hung Huy, ACB chairman at an extraordinary shareholders meeting Wednesday.

Outstanding loans to Nguyen Duc Kien’s firms amounted to some VND7 trillion, Huy said, adding that those loans are backed by audited liquid collaterals. Currently, those companies are operating normally after having new board of directors and the executive boards established.

But the debts have yet to be repaid, so they are represented as loss in ACB book in 2012.

After the arrest on August 20 that triggered big selloffs of ACB shares and massive money withdrawals, ACB suffered huge losses with total assets tumbling by almost 30 percent, or some VND88 trillion.

By the end of the trading session on August 21, ACB shares dropped to the floor, losing 6.9 percent (VND1,800 per share) respectively, to VND24,100 per share.

The closing of gold trading status caused the first loss in gold trading for ACB with VND1.7 trillion, seriously affecting ACB’s governance model and shaking ACB brand reputation, Huy said.

Related to gold trading, Do Minh Toan, General Director of ACB, said ACB suffered a big loss from a central bank’s regulation.

The central bank of Vietnam early this year asked local credit institutions to stop the mobilizing and lending of gold by November 25 and to buy gold from the public to restore their gold stocks that they had earlier partially sold for the Vietnamese dong.

ACB has enjoyed a profit of VND2.38 trillion for selling gold for the dong since 2008, but following this requirement, it now has to buy gold at higher prices than the price they sold in the past, hence the loss.

Such losses have affected business results of ACB in the last 2 quarters of 2012. In 2012, the bank’s profits will likely stand at only VND1.7 trillion, down 59.3 percent year on year, while the initial plan set out from the beginning of the year was VND5.5 trillion.

Besides, ACB has suffered a VND719 billion ($34.5 million) loss caused by Huynh Thi Huyen Nhu who swindled a combined VND4 trillion, or $192 million, from several banks and credit institutions.

Police in early December released conclusion on the case of Nhu, 33, former official of Vietinbank, under which she has mobilized some VND200 billion at exorbitant deposit interest rates from many individual investors since 2010 to invest in the realty market.

Regarding the problem, Do Minh Toan, general manager of the bank, said though no conclusion could be drawn, ACB hope it can recover the amount of money.