Eximbank cleans up after scandals

Eximbank has lost a great deal of trust from customers and shareholders, as some demand the board to step down

After a throng of scandals that damaged its reputation, Eximbank is trying its best to clean up and revive its business. The bank used to be one of the top lenders in Vietnam prior to 2012, and its New Eximbank project promises to regain the bank position within the next three years.

Bui Quang Tin from the Ho Chi Minh City Banking University commented that Eximbank used to be a leading commercial lender with a well-established track record. The expert hoped to see new board members using their expertise and skills to revive the bank.

Analysts from Ho Chi Minh Securities also believe that recent embezzlement scandals may not affect Eximbank’s immediate profits, as court procedures tend to last for a few years. The analysts maintained a positive outlook for the bank, stating that its business activities have shown signs of improvement.

In their report, analysts forecast Eximbank’s share prices to reach VND18,800 ($0.82) this year, trading at 16.9 times its expected earnings. As of last Friday, Eximbank’s shares stood at VND15,000 ($0.65) per share.

The road to recovery, however, can be a long one. At last week’s annual general shareholders' meeting, the shareholders of Eximbank expressed their disappointment at the bank’s recent crises.

According to the investors, the troubled bank has tainted its long-standing reputation by allowing dishonest staff members to steal depositors’ money over a prolonged time period. In particular, Chu Thi Binh lost VND245 billion ($10.8 million) of her savings in two years, and six customers in the central province of Nghe An saw VND50 billion ($2.2 million) of their deposits evaporate. Another customer recently accused the bank of stealing three taels of gold.

“How can you ask shareholders now to pay for your serious oversights?” a furious shareholder asked the board. Another investor wanted the board members to resign and take full legal responsibility for the cases.

Shareholders are also unhappy about Eximbank’s slow response. A day before the meeting took place, Binh had sent another complaint letter, demanding to get her money back immediately. However, it seems that her long wait will continue, as Eximbank representatives stood their ground that the bank must receive court orders before issuing her full compensation.

The depositors in Nghe An who lost $2.2 million were also upset that Eximbank postponed a court meeting with them last Wednesday to focus on its annual meeting on Thursday. According to the depositors, this delay goes against Eximbank’s promise to stand with customers.

In response to shareholders’ anger, CEO Le Van Quyet reiterated that the bank is working closely with regulators to protect customers’ rights. Five employees related to the Chu Thi Binh case as well as 16 officers in the Nghe An case have been arrested.

Quyet stressed that Eximbank detected the wrongdoings at the early stages and immediately notified customers. “In response to these scandals, we have revamped our security system, reinstated the fingerprint identification step, and started rotating branch leaders to prevent future misdeeds,” said Quyet.

Last week’s meeting at Eximbank was also shrouded in drama related to its board members. Specifically, four investors fought for one seat on the 11-person board, but three nominees dropped out of the race just one day before the meeting. The only remaining candidate—former CEO of Nam A Bank Luong Thi Cam Tu—was added to Eximbank’s current board, with approval from the State Bank of Vietnam (SBV).

In 2016, two other senior executives of Nam A Bank also joined the bid to lead Eximbank, fuelling speculations that the two lenders might merge. However, these two bankers later withdrew. At the time, there were also rumours that state-owned Vietcombank, which holds 8 per cent of Eximbank’s shares, might sell off its entire stake to Nam A Bank. So far, there has been no confirmation from elated parties.

At last week’s meeting, Eximbank also gave updates on its divestment from commercial lender Sacombank, as it was instructed by SBV to reduce cross-holdings in the banking sector. Throughout 2017, Eximbank sold its 8.76 per-cent stake at Sacombank, cutting all ties with the latter after six years.

In 2016, Eximbank unsuccessfully attempted to hold its annual general shareholders’ meeting three times due to conflicts and even physical violence between its shareholders over falling profits, rising bad debts, and low standards of corporate governance.

This was unprecedented in Vietnam’s banking history.

This year, Eximbank plans to earn VND1.6 trillion ($69.6 million) in pre-tax profit, up 57 per cent against 2017. Credit is expected to grow by 12 per cent.