Despite the financial and banking sector posting profits and high credit growth rates in 2010, a recent report of the State Audit of Vietnam revealed that a number of financial institutions and banks in Vietnam made wrong investment decisions with many of them incurring losses.
Bank for Foreign Trade of Vietnam, or Vietcombank, saw its investment capital into Saigon Postel Corporation slumping nearly 90% from VND138 billion to only VND23 billion at the end of 2010. The bank’s capital adequacy ratio (CAR) was 6.8%, 6.5% and 7.6% in the first three months respectively, which were all lower than the ratio required of 8%.
Meanwhile, some affiliates of BaoViet Holdings posted losses, including Bao Viet Securities Company and Bao Viet Securities Investment Fund incurring losses of VND90 billion and VND71.3 billion respectively, according to Sai Gon Tiep Thi.
Besides, Vietnam Development Bank (VDB) reported a bad debt ratio of 12.45% as of the end of 2010, which is a high number compared to those of State-owned credit organizations and banks. Of which, bad debt ratio of development and investment loans was 12.05% and that of export loans was 13.42%.
VDB was also found to give commercial loans without permission, leading to losses of over VND18 billion while overdue debt rose to VND438 billion.
The bank also mobilized capital around VND3.8 trillion higher than scheduled, resulting in capital backlog and increasing interest rate compensation from the State budget. In 2010, VDB was compensated over VND2.2 trillion.
While VDB received the compensation and maintained high bad debt ratio in 2010, the lender reported an average non-term and term deposit of over VND25.2 trillion. This suggested that the bank had many shortcomings in money flow management and credit activities.
Vietnam Bank for Social Policies was uncovered to give loans to unsuitable borrowers. The lender also had no supervision and checking mechanism after assigning social organizations to provide loans.
Debt and Asset Trading Corporation (DATC) also failed to carry out obligations mandated with poor capital use and mistakes in depositing and lending. DATC ran into poor liquidity and had loss danger with a CAR of just 1.04% in 2010.
The Saigon Times Daily