Vietnam's state auditor uncovers shady loans using state insurance fund

By Ngan Anh, Thanh Nien News

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A branch of the Vietnam Bank for Agriculture and Rural Development (Agribank), in the Mekong Delta City of Can Tho. File photo A branch of the Vietnam Bank for Agriculture and Rural Development (Agribank), in the Mekong Delta City of Can Tho. File photo
The State Auditor has discovered violations in the categorization of debt, capital mobilization, and lending activities at the three biggest commercial banks in Vietnam, once again raising the specter of more bad debt.

The 2013 audit report, released last Friday, examined activities at the central bank, the Vietnam Development Bank (VDB) and the three commercial banks: Agribank, Vietcombank and Vietinbank.

The auditors found that the three banks had loaned out funds deposited by the Vietnam Social Insurance Agency which controls funds for state pensions, the unemployed and employees on maternity leave.

Those loans violated of the law on credit institutions and were issued at interest rates that exceeded the State Bank ceiling.

Specifically, the audit found that Agribank overpaid the insurance fund VND10.57 billion (US$0.5 million); Vietcombank, VND25.56 billion; and Vietinbank, VND30.79 billion.

The report charged that Agribank, Vietnam's largest state-owned bank by assets, violated regulations in lending activities, causing greater risk of more bad debt by failing to properly guarantee its loans. 

The report charged that a company called REVN took out a VND518 billion loan from a foreign bank after signing a contract with Agribank's Trang An Branch to serve as its credit guarantor. That guarantee, according to the recent audit, never made it into Agribank's books.

Additionally, the bank's West Hanoi branch was found to have guaranteed a VND389 billion loan, but told auditors that they'd somehow lost the contract. Two local enterprises have reportedly sued Agribank for the funds.

The audit further found that bad debt ratios at two-thirds of Vietnam's commercial banks exceeded the 3 percent safety cap set by the central bank, according to the report. Vietinbank had bad debt ratio of 5.23 percent, and Agribank 15.68 percent.

In addition to the banking woes, the audit also uncovered violations of fee collection regulations at some universities and identified violations of land use and financial investment laws at some enterprises

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