The Annual general Meeting of Shareholders of Vietnam Joint Stock Export Import Bank (Eximbank) continues to heat up the issue of high-level personnel among major shareholder groups.
In addition to a new development in the story of senior personnel at Eximbank, the Bank recently announced Resolution No. 112/2019 on the appointment of Luong Thi Cam Tu, member of the Board of directors, as the Eximbank’s Chair of the Board of directors in term VI (2015-2020) replaces Le Minh Quoc, an independent member of the previous Board of directors.
Previously, Tu was elected to the Board of directors on the occasion of the Annual general Meeting of Shareholders held in April 2014. Tu was nominated by a group of shareholders to be a representative on the Board of directors. Last year, the new Chair of the Board of directors also bought Eximbank shares, with the ownership rate up to 1.12 percent.
The time of the announcement was quite sensitive, just one month before the Annual general Meeting of Shareholders. The new movements in the story of senior personnel at Eximbank are also noticeable because one year ago, the Annual general Meeting of Shareholders also used to be heated up with a list of new candidates to be elected to the Board of directors with four people, but finally only Tu remained. Tu is a former general director of South Asia Bank, which was rumoured to conduct M&A with Eximbank many years ago.
However, the journey to the highest seat of the Bank is also not smooth. Right after the announcement of the Resolution appointing Tu, recently a letter of accusation appeared. Le Minh Quoc, who has just been dismissed, is believed to own the letter. The content of the letter denouncing the meeting to elect the Chair of the Board of directors is wrong and not legally valid. Specifically, on March 20, Quoc informed that there was a written request not to convene a meeting on March 22 by a group of five members of the Board, but this meeting still took place and elected Tu as its chair.
Shortly thereafter, Eximbank raised its feedback, denying allegations of dismissing the position of Chair of the Board of directors illegally in the meeting on March 22. Eximbank’s representative affirmed that the appointment of Tu was in accordance with the provisions of the Enterprise Law (Article 53) and according to Eximbank’s charter (Article 44).
Notably, the content of the letter also mentioned that Japanese strategic shareholder Sumitomo Mitsui Banking Corporation (holding 15 percent of shares and two representatives in the Board of directors) had one member suddenly resigned, leading to problems in organising the Board meetings. However, Eximbank responded that: “The number of attending members of the Board of directors (at the meeting on March 22 and the previous sessions) is in accordance with the provisions of law. In particular, there was consensus of two members of the Board of directors representing Sumitomo Mitsui Banking Corporationa strategic shareholder of Eximbank. ”
In fact, this is not the first time the bank has been involved in disputes in the Board. Senior personnel positions have been constantly changing over the past few years, and there have been rumours of shareholder groups who are not solid, with no consensus on management and governance issues.
Previously, Le Minh Quoc was appointed to the position of Chair of the Board of Eximbank in December 2015 at the general Meeting of Shareholders. The meeting was considered extraordinary after many unsuccessful meetings. Quoc was previously an independent member of the Board of directors, who did neither hold any shares nor represent any organisation at the bank.
In the last few years, the representative of Sumitomo Mitsui Banking CorporationEximbank’s shareholder have always been on the executive board, discussing issues related to the Bank’s business operations. This group has two representatives in the Board of directors, also in charge of the project of transforming Eximbank, helping to streamline the management apparatus, and improving the management and administration efficiency.
Another notable development in the past year is that the remaining major shareholder Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has now divested to below five percent due to the regulation of not owning more than five percent of other credit institution’s shares. Therefore, the bank is no longer a major shareholder and its representative had been withdrawn from the Board of directors and the control committee in the middle of last year.
In the stock market, Eximbank’s stock has been trading vibrantly. In fact, Eximbank’s liquidity and price of EIB shares often have noticeable movements before the meeting, soaring up at the time of closing the list of attendees at shareholders’ meeting. The price of EIB increased to 17,600 dong per share on March 26, a significant increase compared to 14,000 dong per share at the beginning of the year.
In the last few years, Eximbank’s shareholders have continued to suffer because the Bank is not only dealing with bad debts or accumulated losses, but also struggling from operation processes. 2018 was also the peak year when the Bank was caught up in customer losses in deposit accounts, up to hundreds of billions of dong.
According to Eximbank’s consolidated fourth quarter financial report, net interest income of the Bank last year increased by more than 20 percent, but with the increase in operating costs (nearly 32 percent). The reason is because the Bank has increased the provision for bad debt. Last year, Eximbank also had to set up additional 390 billion dong for two deposit cases.
With the latest moves, this meeting is expected to continue to heat up the issue of high-level personnel among major shareholder groups. As for the small shareholders, perhaps what they are interested in now is when Eximbank will be really back to stability.
