The State Bank of Vietnam (SBV) has announced its decision to enforce a mandatory transfer of two commercial banks, DongA Bank and GPBank.

This move is part of ongoing efforts to stabilize the banking system, reminiscent of the case with OceanBank (now MBV Bank) and Construction Bank (CB), which were acquired for zero VND in 2015.

DongA Bank, however, differs in that it was not acquired at zero value, despite being placed under special control by the SBV in August 2015.

Since August 14, 2015, all DongA Bank shareholders have been prohibited from transferring their shares unless specifically approved by the SBV under recommendations from the bank's Special Control Board.

This effectively froze shareholder assets until further decisions about the bank's future.

At the time of being placed under special control, DongA Bank had a charter capital of VND 5,000 billion, with 100% domestic shareholders.

Institutional shareholders held 40.68% of the shares, while individual shareholders accounted for 59.32%.

Key stakeholders prior to control

As of December 31, 2014, major institutional shareholders included:

Bac Nam 79 Construction JSC, chaired by Phan Van Anh Vu (also known as Vu "Nhom"), holding 10% of the charter capital.

Phu Nhuan Jewelry JSC (PNJ), affiliated with Tran Phuong Binh and Cao Thi Ngoc Dung, holding 7.7%.

The Ho Chi Minh City Party Committee Office, holding 6.9%.

Ky Hoa Tourism and Trading Co., Ltd., holding 3.78%.

An Binh Capital JSC, holding 2.73%.

Phu Nhuan Construction and Trading Co., Ltd., holding 2.14%.

Individual shareholders with notable stakes included Tran Phuong Ngoc Ha (2.06%) and Tran Phuong Ngoc Giao (2%), both children of former General Director Tran Phuong Binh and Cao Thi Ngoc Dung.

By mid-2024, some related parties of DongA Bank board members still held minor stakes, with none exceeding 1.015% of the charter capital.

Financial struggles and mandatory transfer

Before being placed under special control, DongA Bank experienced severe financial distress, including negative equity.

Under Article 179 of the 2024 Law on Credit Institutions, a mandatory transfer can be enforced when a bank accumulates losses exceeding 100% of its charter capital and reserves.

Article 183 of the same law specifies that all rights and benefits of shareholders, including owners and capital contributors, are terminated once the SBV enforces a mandatory transfer.

In DongA Bank’s case, this includes the complete write-off of its charter capital to offset cumulative losses.

The acquiring entity will oversee changes in licensing and implement the approved transfer plan.

End of shareholder rights

As stipulated by law, shareholders of DongA Bank, including the family of Cao Thi Ngoc Dung and related parties, lose all ownership rights upon the enforcement of the mandatory transfer.

This decision marks a significant turning point for DongA Bank as it enters a new chapter under the mandatory transfer framework. DongA Bank's journey under special control culminates in a mandatory transfer, as the SBV enforces measures to address its significant financial challenges.

Tuan Nguyen