Transactions are carried out at an ACB transaction office. The bank is actively handling bad debt, its shareholders' meeting is told on April 8. — Photo vietstock.vn

HCM CITY (Biz Hub) — The Asia Commercial Bank (ACB) is actively handling the issue of bad debts caused by a former senior official, who was jailed for his role in a multi-million dollar scandal.

ACB General Director Do Minh Toan made the statement at a shareholders' meeting in HCM City today, when asked about the issue.

Nguyen Duc Kien, who was the former co-founder of the bank and one of the top banking tycoons in Việt Nam, was sentenced to 30 years in jail in 2014 for fraud, tax evasion, illegal trade and deliberate wrongdoing causing serious consequences.

Toan said the bad loans of some companies run by Kien totalled nearly VND5.8 trillion (US$257.8 million) as of December 31, 2015. This year, ACB plans to recover VND2 trillion out of this total amount.

Toan said the bad loans were guaranteed with mortgages and some real estate shares, and the ACB will have to find ways to sell these assets for debt recovery although the State Bank of Viet Nam (SBV) has adopted a mechanism for settling soured loans.

Nguyen Van Dung, the head of the HCM City banking supervision department, said that following the mechanism given by the authorities for a lender facing problems arising from the past, ACB will have four to five years to fully handle the debts.

"However, the ACB must have high determination in establishing provisional funds and stepping up debt recovery," he told VnExpress online.

Toan said that the ACB will establish a provisional fund worth VND1.5 trillion against non-performing assets in 2016, with VND1 trillion to be used as a provision for Kien-related loans. As many as VND200 billion has already been established in the first quarter.

Besides the case involving Kien, Toan told shareholders that the ACB is making progress in restructuring its deposits at two nationalised banks, Viet Nam Construction Bank (VNCB) and Global Petrol Bank (GP.Bank).

The deposits at VNCB are worth VND400 billion and the amount at GP.Bank is VND772 billion. The SBV acquired both ailing banks last year, at a price of zero dong per share.

At today's meeting, Julian Fong Loong Choon, who represented a 15 per cent stake of Standard Chartered Bank in ACB, petitioned for his resignation.

The representative said Standard Chartered assigned him to help ACB train its human resources over the last few years, and he had completed his mission as staff conditions had basically stabilised at the local bank.

He affirmed that Standard Chartered will continue to be a strategic partner with sustained investments at ACB.

With regard to this year's business plans, ACB Chairman Tran Huy Hung said the bank's charter capital is expected to be increased from VND9.4 trillion to VND10.3 trillion, by paying dividend in shares at a rate of 10 per cent, with retained profits.

An increase in equity is needed for the bank to ensure capital security, enhance financial capacity, extend lending limits and cope with market fluctuations, he said.

This year, the bank plans to reach more than VND1.5 trillion in pre-tax profits, an increase of 14 per cent over last year, on a deposit and lending growth rate of about 18 per cent. Its total assets are also expected to rise by 18 per cent year-on-year at VND237 trillion in 2016.

In 2015, the bank's pre-tax profits grew by eight per cent year-on-year at VND1.3 trillion and its total assets were up 12 per cent year-on-year at VND201.5 trillion. Its deposit and lending growth rates were 13 per cent and 15 per cent, respectively, with the bad debt ratio falling to 1.3 per cent from the 2.2 per recorded at the end of 2014. — VNS