Ph.D Le Dang Doanh: Buying a bank at VND0 is a "Vietnamese invention"

Le Dang Doanh, former director of the Central Institute for Economic Management (CIEM), shared with TheLEADER his comments on the recent turmoil in banking system. 

After being acquired, Oceanbank and CB Bank were legally owned and managed in banking and currency by the State Bank.

SBV certainly tried to prevent the two banks from falling into bankruptcy, as that could have had an adverse impact on the commercial banking system as well as business and consumer confidence. However, buying banks that have been investigated for criminal activities is seems questionable, even if the SBV says it will not hinder the investigations.

To my knowledge, there is no precedent in the world about buying a bank at VND0. It seems to be a “Vietnamese invention”.

In the world, commercial banks may be bankrupt or be acquired by the State when its stock goes to the bottom. The State will support and help the banks develop. When the stock price of the bank recovers, the State will sell shares and earn profit. 

PetroVietnam’s (PVN) use of crude oil revenues to purchase shares in Oceanbank is contrary to international practice. This poses the risk of forming an industrial group that will be very difficult to be monitor.

Indeed, Oceanbank used large sums of money from PVN to lend at high interest rates. Then it divided profits in a fraudulent way. 

"Putting all eggs into a basket" is contrary to the principle of risk dispersion in the market and it leads to "sink or swim" problem.

In order to attract more capital from the Petrovietnam, Oceanbank spent huge sums of money bribing the group's officials. Nguyen Xuan Son, former CEO of Oceanbank, has identified those officials yet, but these matter definitely need to be clarified and the State Bank of Vietnam will learn from these shortcomings.