Vietnam biggest state bank starts restructuring

Thanh Nien News

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A branch of Agribank, officially known as the Vietnam Bank for Agriculture and Rural Development, in the Mekong Delta City of Can Tho. File photo A branch of Agribank, officially known as the Vietnam Bank for Agriculture and Rural Development, in the Mekong Delta City of Can Tho. File photo
Agribank, Vietnam's largest state-owned bank by assets, began initiating its restructuring plan last week by appointing new leaders, Thoi Bao Kinh Te Saigon reported Tuesday.
A report released by the State Audit Office of Vietnam in April identified numerous problems at the lender, which was established to develop Vietnam's agriculture sector.
State auditors pointed out that, in 2012, the bank “routinely” ignored safety regulations like the government's cap on the ratio of capital to risk.
More Agribank officials were arrested for improper conduct over the past two years than those from any other bank, the newspaper reported, noting that the arrests were reported in local media almost monthly.
Due to its many loan-related violations, Agribank, officially known as the Vietnam Bank for Agriculture and Rural Development, has one of the country's highest ratios of bad debt to outstanding loans.
The state audit office report found that the bank’s bad debt accounted for 8.16 percent of its outstanding loans by December 31, 2012 -- up 34.43 percent year-on-year.
The ratio was exactly double the average that state auditors calculated among 125 other banks.
That ratio would be 15.68 percent, the state auditors said, if you counted loans that were restructured following an order from the State Bank in 2012. They also noted that only 3.57 percent of its 2013 income came from investments. 
Many of its investments have yet to yield profits, while many others lost as much as 90 percent of their value.
According to the bank’s website, as of May 25, outstanding loans amounted to over VND530.76 trillion (US$24.86 billion), 71.7 percent of which were disbursed in the agricultural sector.

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