Brian Jeffrey
Cao Sy Kiem’s Role at Dong A Bank
Cao Sy Kiem joined Dong A Bank’s board of directors in March 2012 and became its chairman in June 2014. He resigned in August 2015, a decision that the board accepted.
Despite his resignation, the bank’s recent corporate governance report for the first half of 2024 still recognizes him as a board member. This issue stems from legal requirements that mandate a shareholders’ meeting to formalize such resignations.
Since Dong A Bank has been under the oversight of the State Bank of Vietnam (SBV) since his resignation, it has been unable to hold general shareholder meetings to finalize this process.
Dong A Bank’s Financial Decline
Historically, Dong A Bank was a leading financial institution in Vietnam, especially known for its card services and remittances, reaching its peak before 2011.
In 2011, it recorded impressive pre-tax profits of VND 1.255 trillion ($52.4 million) and post-tax profits of VND 950 billion ($39.7 million). However, profit margins began to fall sharply starting in 2012.
The bank’s post-tax profit plummeted from VND 577 billion ($24.1 million) in 2012 to VND 300 billion ($12.5 million) in 2013, ultimately sinking to only VND 27 billion ($1.1 million) in 2014.
During this time, bad loans skyrocketed, especially in the real estate sector, with the bad debt ratio jumping from 1.69% in 2011 to 3.95% in 2012 and 3.99% in 2013. By 2014, the bank stopped reporting these ratios before being placed under special control.
Major bad debts were associated with loans to Phat Dat Real Estate Company.
No dividends were paid to shareholders in 2013 or 2014, illustrating the bank’s deteriorating financial health.
Even after his resignation, Kiem’s name remains tied to the bank due to incomplete administrative procedures. The bank noted that, according to Vietnamese law, a shareholders’ meeting is required to finalize such changes, a situation complicated by the SBV’s control since 2015.
Vo Minh Tuan took over as chairman after Kiem’s resignation, but in August 2022, Nguyen Thanh Tung was appointed as chairman, also by the SBV, to manage the bank’s operations during this challenging period.
Shareholder Structure
Prior to being taken under special control, Dong A Bank had a registered capital of VND 5 trillion ($208.7 million) solely owned by local investors. The ownership breakdown showed corporate shareholders holding 40.68%, with the remaining 59.32% owned by individuals.
Key corporate shareholders included:
- Bac Nam 79 Construction Joint Stock Company (10% stake)
- PNJ (Phu Nhuan Jewelry) owned by Tran Phuong Binh and Cao Thi Ngoc Dung (7.7%)
- Ho Chi Minh City Party Committee Office (6.9%)
Significant individual shareholders were Tran Phuong Ngoc Ha (2.06%) and Tran Phuong Ngoc Giao (2%), both children of Tran Phuong Binh and Cao Thi Ngoc Dung.
Cao Sy Kiem’s Background
Cao Sy Kiem, born in 1941 in Thai Binh, was the Governor of the State Bank of Vietnam from 1989 to 1997. He also chaired the Vietnam Association of Small and Medium Enterprises and served as a long-time member of Vietnam’s National Assembly.
As chairman of Dong A Bank, he worked closely with Tran Phuong Binh, who was vice chairman and CEO, emphasizing the intertwined nature of their roles.
The ongoing issue of Kiem’s status on the board highlights the regulatory challenges that banks like Dong A Bank face under special control, as they navigate their restructuring efforts amidst past difficulties.
