Government Inspectorate discovers massive violations at Agribank

The inspection covers the bank’s activities in the areas of credit and financial investment and construction between 2009 and 2011.

Being one of the largest commercial state-owned banks in Vietnam, Agribank still ensures annual credit growth goal and pay of taxes worth around VND1 trillion (USD47.6 million) annually. Nonetheless, behind this, the bank has been found to have violated many regulations.

Violations in capital mobilisation and gold lending

According to the Government Inspectorate’s conclusions, between 2009 and December 31, 2011, Agribank spent VND238.2 billion (USD11.3 million) on brokers so that those could help to lure deposits for the bank and the depositors were offered interest rates which surpassed the ceiling level of 14% per annum as regulated by the government.

Meanwhile, Agribank is found to have violated in the authority of credit grant. From June 16, 2009, to July 12, 2011, 189 customers were approved for getting the loans from the bank, but without any papers authorised by the bank’s general director as stipulated.

The bank did not issue any guiding documents in regulations of gold mobilisation and lending activities as regulated by the governor of the State Bank of Vietnam.

Providing credit for its affiliates, surpassing the regulated rate

Agribank provided credit for its affiliates with levels which are even 20% higher their equity despite being reminded by the State Bank of Vietnam.

The bank also issued a payment guaranty letter for Agribank Leasing Company No. 2 (ALC II) for an illegal loan from Vietnam Social Insurance. Due to daunting losses incurred by the firm, the bank had to help it to pay off the loan of VND208.7 billion (USD9.95 million).

Under current regulations of the State Bank of Vietnam, from January 1, 2011, one credit organisation is not allowed to deposit money at other credit organisations. Credit organisations are also banned from receiving deposits from one another. However, in 2011, Agribank sent its deposits to other banks, while also receiving other banks’ deposits.

Affiliates take big losses

According to the Government Inspectorate, Agribank’s wholly-invested companies took a total loss of VND1.78 trillion (USD84.7 million) in 2009 and about VND4.4 trillion (USD209.5 million) in 2010, particularly Agribank Leasing Company No. 1 (ALC I) and Agribank Leasing Company No. 2 (ALC II).

Agribank invested VND144 billion (USD6.85 million) in buying shares of CMC Corporation, but by the end of December 2011, the share value dropped to just over VND20 billion (USD952,380).

Agribank Securities Company (Agriseco) also took great losses. In December 2011, Agriseco invested in 287 share codes with a total value of VND576.3 billion (USD27.4 million), however, to date, the figure has fallen to VND294.1 billion (USD14 million).