A Vietnamese central bank official said on Friday that problems at a big bank hit by a scandal appeared to be contained, while the country's stock market regained a bit of the ground lost this week following arrest of one of the bank's founders.
Asia Commercial Bank (ACB) has been rocked by two arrests, of co-founder Nguyen Duc Kien on Monday and then of chief executive Ly Xuan Hai late on Thursday. After Khien's arrest, some depositors withdrew their savings.
Nguyen Hoang Minh, deputy director of the State Bank of Vietnam's branch in Ho Chi Minh City, told Reuters that withdrawals at ACB had peaked on Wednesday, falling on both the following days.
"ACB's troubles have not spread to other banks," Minh said. "The ongoing situation at ACB has been better than expected."
The central bank official's comments came as ACB tried to convince customers their money was safe following after the resignation and arrest of its chief executive.
At ACB's headquarters in Ho Chi Minh City, staff handed out leaflets to customers highlighting a central bank assurance that deposits in the bank were secure.
Queues at branches of other banks in Ho Chi Minh City were normal on Friday.
At ACB, a screen on the wall repeatedly showed state television footage talking about the safety of the bank, as three security trucks drew up outside with bags of cash that needed around 40 staff to bring inside.
ACB, one of the biggest banks in Vietnam, has faced a run on deposits since the government on Tuesday announced the arrest of co-founder Kien, who is accused of running illegal businesses.
Late on Thursday, ACB, which is 15 percent owned by Standard Chartered PLC , said that Chief Executive Hai, 47, had resigned.
The official Vietnam News Agency reported he had been arrested that day, accused of "intentional wrongdoings that violated state regulations on economic management, causing serious consequences."
That wording is often used in cases where a person goes on trial on corruption charges. If found guilty, a convicted person could face up to 20 years in jail.
The state news report gave no detail on the charges against Hai, who has doctorates in physics and mathematics and joined the bank in 1996. It cited police investigators as saying he would remain in detention for four months.
Some of the customers at ACB's headquarters seemed reassured by the central bank guarantee.
"I feel more confident after the support pledged by the State Bank and also because ACB is a major bank," said Pham Hoang Anh Tuan, although he was still debating whether to withdraw his gold deposits.
The price of gold rose on the domestic market earlier in the week as small savers, fearing a bank crash, saw it as a safe haven. It was lower on Friday after the central bank stopped banks from taking fresh gold deposits or lending gold to clients from Thursday.
Kien, 48, is still an ACB shareholder, although he no longer has a role in its management.
He is chairman of B&B Investment and Trade Joint Stock Co, ACB Hanoi Investment Joint Stock Co and Asia Hanoi Financial Investment Co. The three companies were established to invest in real-estate projects but they raised funds and invested the proceeds in bank shares instead, state media said.
Kien is a well-known figure in the Communist-run country, a member of one of its wealthiest families and deputy chairman of the company that runs its premier football league.
His arrest triggered a slide of more than 10 percent in the main stock market index <.VNI> to a six-month low by the close on Thursday, but it rose 1.76 percent on Friday.
Shares in ACB, Vietnam's fourth-biggest partly private lender, rose 3.8 percent on Friday to 21,800 dong after losing nearly one-fifth of their value earlier in the week.
Other bank shares were mixed on the day. Sacombank gained 2 percent while Eximbank lost 1.7 percent.
ACB said its assets totalled more than 225 trillion dong (6.8 billion pounds) as of August 22, down around 20 percent from the end of last year, while its capital adequacy ratio stood at 10.27 percent.
On Friday, Fitch Ratings said that recent events in the Vietnamese banking industry highlight its vulnerabilities to shocks and could put financial stability at risk, increasing the potential for negative rating actions on banks. Vietnamese banks' ratings are already among the lowest in Asia Pacific.
(Additional reporting by Ho Binh Minh in Hanoi and Nguyen Ha Minh in Ho Chi Minh City; Editing by Alan Raybould and Richard Borsuk)