Banking industry recovers from scandal
  • | VNS | August 30, 2012 07:15 PM

The domestic monetary market has become more stable after it was shaken by the news that several CEOs of local banks and a financial tycoon were arrested due to alleged illegal activities.

 Transactions at VP Bank in Hanoi
On August 20, Nguyen Duc Kien, one of the founders of the Asia Commercial Joint Stock Bank (ACB), and also one of the richest tycoons in Vietnam's banking industry, was arrested for conducting alleged "illegal business".

Three days later, the police also detained ACB chief executive Ly Xuan Hai on suspicion of "deliberately acting against state regulations on economic management".

These events have sent shock waves through the country's financial markets and prompted fears among customers who rushed to get their money out of ACB.

Fearing that the public lack of confidence could spread beyond ACB, Viet Nam's central bank pumped more than $1 billion to ensure the stability of the local banking sector.

Speaking about these events with the media on August 25, the central bank's Governor Nguyen Van Binh said that a high volume of money that had been withdrawn from the ACB on August 21, 22 and 23 but it had dropped significantly on August 25.

He said that activities of the ACB and the banking sector had returned to normal.

The ACB was able to meet all depositors' demands for withdrawal of Vietnamese dong, US dollar and gold.

The governor affirmed that the central bank had taken sufficient measures to ensure stable operations of the banking sector and the ACB. In ACB latest report, from August 21-27, deposits at the bank totalled VND33.44 trillion ($1.59 billion, of which more than VND5 trillion ($238 million) was redeposited.)

Transactions at the bank have returned to normal, according to Nguyen Thanh Toai, the bank's deputy director.

At the end of August, the market also saw strong price fluctuations for gold and for the exchange rates between the dong and the US dollar on the domestic market.

Independent market watchdogs said the gold market became hot over the last week with the gold price jumping to VND44.7 million per tael on August 23 from VND42.6 million in March, while the global price remained stable.

The exchange rate between the dong and US dollar also climbed to over VND21,000 per dollar on August 27, up by over VND100 compared with August 23.

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