VietNamNet Bridge - Dong A Bank, which was once of the best joint-stock commercial banks in Vietnam with advantages in card technology and retail banking, has gone downhill because of the gold trade.

Just one week after Dong A Bank was put under the State Bank’s control, its CEO Tran Phuong Binh, a veteran banker, was dismissed from his post. 

Dong A remains the only bank in Vietnam which has technology allowing ATM (automatic teller machines) to sell gold.

Dong A was one of the bank pioneers in developing card services. In 2005, when other Vietnamese commercial banks applied simple card technologies, Dong A became a ‘big guy’ in the field. It hired Viet Kieu (overseas Vietnamese) experts who had worked for many years for CitiBank to help develop the card center.

Dong A was the only Vietnamese bank CitiBank once eyed in 2006-2007. The US-based bank once sent a group of 60 experts to negotiate with Dong A on buying Dong A’s shares. 

A deal might have been made at that time, if Dong A accepted the VND48,000 per share price offered by CitiBank, which was lower than the VND60,000 price level Dong A wanted.

Dong A was in the top three Vietnamese joint stock banks (the other two were ACB and Sacombank). 

From the day it was put under the special control of the State Bank, the bank has had 7 million customers, a figure which many other banks can only dream of.

Dong A was very good at mobilizing capital. The dong and dollar deposit interest rates offered by Dong A were always a bit lower than other banks. However, its mobilized capital from the public was always high.

Unlike many other banks, it did not run a race to lend money. The bank’s 2014 audited finance report showed that its outstanding loans were VND50.897 trillion, while the mobilized capital reached VND77.417 trillion, which meant a low ratio of loans on mobilized capital at 65.7 percent.

Analysts noted that a large amount of capital, VND26.52 trillion, was not used to lend. What was it used for?

A senior official of the State Bank, who asked to be anonymous, revealed that Dong A used the money to trade gold, and it might have even traded gold on accounts overseas.

Dong A was one of the five commercial banks which joined the State Bank-initiated program on stabilizing the domestic market, and therefore, it was allowed to make on-account gold trades overseas.

The Phu Nhuan Jewelry Company was a shareholder of Dong A, which holds 10 percent of the bank’s stake, which gave more advantages to Dong A to trade gold.

TBKTSG