Brand, manager shake ups critical to reforming bad banks

In the recent past, Tien Phong Commercial Joint Stock Bank launched a new brand and changed its transaction name to TPBank.

After a year and a half of self-restructuring, the bank has seen positive results.

According to chairman Do Minh Phu, before restructuring, TPBank reported low liquidity and bad debts exceeding 6.4 per cent and faced insolvency.

Until now, the bank has succeeded in raising its chartered capital from VND3 trillion ($142 million) to VND5 trillion ($264 million), double its total asset value and reaping profits of more than VND500 billion ($23.8 million).

The bank’s deposits have more than doubled, its bad debts have slid to 2.7 per cent, and its customer base has tripled.

In the middle of this year, after getting State Bank approval, private TrustBank changed its name to Vietnam Construction Joint Stock Commercial Bank after a group of new shareholders made a significant capital injection.

The new structure aims to focus on providing unique banking services to corporate clients operating in the fields of manufacturing and trading building materials and constructing social housing.

Most recently, Navibank asked for shareholder input in changing its name into Dan Quoc Joint Stock Commercial Bank along with a logo change, brand identity shift and moving of the head office from Ho Chi Minh City to Hanoi.

The move came after a major shake-up of the Board of Directors.

Banking expert Nguyen Tri Hieu said the name and brand changes were vital to the banks’ post-restructuring goals.

“Banks rely on the trust of their customers and when a bank develops a bad reputation due to low liquidity and sustained losses, designing a new name and brand shows the bank’s intent to make changes and puts customers’ minds at ease,” Hieu said.

TPBank CEO Nguyen Hung said three factors were crucial to ensure successful restructuring.

His first point was to achieve real capital flows to help would-be-restructuring banks improve their financial strength.

Second was having a real shareholding structure where the principle shareholders do not use the bank’s capital for private affairs.

Third was having an experienced and capable Board of Directors.