Vietnam banks pledge to aid ACB after shareholder's arrest

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The State Bank of Vietnam and all other banks have pledged to guarantee the liquidity of Asia Commercial Bank (ACB) following the arrest of one of its shareholders on Monday night.

In a statement published on the State Bank's website Wednesday, Nguyen Huu Nghia, the bank's chief inspector, said that they would guarantee the protection of ACB deposits.

The statement came two days after the arrest of Nguyen Duc Kien, a founder and shareholder at ACB, on suspicion that "illegal business activities" were being conducted at three companies where he served as a board chairman.

ACB Director General Ly Xuan Hai has reportedly also been summoned for questioning following Kien's arrest.

The arrests quickly caused ACB shares to take a dive. Stocks at other banks where Kien was believed to have shares also fell.

On Wednesday, ACB announced that its management board had appointed Deputy Director General Do Minh Toan to manage ACB's operation in the absence of Hai.

The bank also said that Board Chairman Tran Xuan Gia, who is currently on a business trip in the US, had authorized Vice Board Chairman Le Vu Ky to handle his duties between August 6 -24.

On Thursday, a report on the Dat Viet news website quoted Nguyen Thanh Toai, deputy general director of ACB, as saying that customers had withdrawn around VND8 trillion (US$384 million) from the bank in the two days following Kien's arrest.

Withdrawals tripled on Wednesday compared to the day before, but were considered less severe than expected, Toai said.

The bank's liquidity tripled just before, Toai addressed reporters on Thursday morning, taking its total holdings to VND30 trillion ($1.44 billion) in cash. 

Toai denied speculation that ACB would lose its liquidity following the incident, saying that ACB continued to operate "normally" on Thursday morning.

"With such holdings, the bank believes that it will be able to maintain liquidity and cope with every challenge," he said.

The bank executive was also quoted as saying that the withdrawals hadn't increased on Thursday. However, he said it was still unknown if withdrawals would decrease, adding that they had to wait until the working day ended.

"Rumors about ACB have inspired this run on the bank," he stressed."But it is only temporary." 

Earlier, following Kien's arrest, Toai told the press that since Kien's departure from the bank's management board in 2010, he had gradually withdrawn his financial investment.

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Kien currently holds less than 5 percent of ACB's shares, Tuoi Tre quoted Toai as saying.

Following Toai's statements, representatives from other banks where Kien was rumored to be a shareholder, including Eximbank and Sacombank, announced that he either had no share in their institutions or that his shares were so insignificant they would have no effect on their operations.

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