Bank denies problems, massive discharges

Monday, Nov 18, 2013 16:13

Customers use Eximbank services. The bank has repositioned many employees from its head office to branches to strengthen sales staffs. — Photo

HA NOI (Biz Hub) – Eximbank (EIB) chairman Le Hung Dung last week justified a recent plan to buy back shares as a bid to improve stock prices.

The confirmation came as the bank became plagued by rumours it was resisting a takeover and facing internal problems. The confirmation follows a statement from Dung on November 5 that the bank was waiting for approval from the State Securities Commission (SSC) to repurchase nearly 62 million shares, equivalent to 5 per cent of total shares.

"Propping up our share prices is the only reason, don't deduce anything else," he said.

"Formerly, EIB prices were usually higher than VND15,000 (US$0.71) per share, but they are just around VND13,000 ($0.62) now. It will benefit shareholders if the prices return to VND15,000-15,500 next year," he added.

The total volume of EIB shares traded on the HCM City Stock Exchange reached around 10 million shares within the past month. However, no large shareholders would unload EIB shares over the coming months, Dung affirmed.

Asked whether Eximbank would buy back shares if EIB prices increased, he said: "We have assigned specialists to calculate when to buy or sell for efficiency. We won't buy if prices rise too high."

At the end of June, the bank had nearly VND685 billion (US$32.62 million) in retained profits, saying it would use around VND800 billion ($38.1 million) to reacquire a 5-per-cent equity at current prices. The bank will have to up its bid for the buyback if prices increase, with dividends likely to be affected by an increase in share prices.

Addressing claims that Eximbank was dismissing 1,000 employees not working in direct sales, Dung commented that downsizing staff was unavoidable given the current climate.

In new developments, the bank had terminated working contracts with 48 employees and repositioned over 300 people from the head office to branches to strengthen sales and boost retail activities. This was to increase wage funds for those in "direct sections".

"We think that this is a suitable way in the current context. We have been trying to rearrange jobs and limit employee discharge, with the aim to make more profits and assure employees' incomes," he said.

Dung said the bank also adjusted salary policies by doubling or tripling wages for outstanding sales clerks and cutting management wages. Salaries were slashed by 50 per cent for the company's chairman, 30 per cent for the general director, and 12-20 per cent for junior managers.

The drastic cost cuts were due to sharp profit declines, he said. "Eximbank will be able to reach VND1.5-1.6 trillion ($71.43-76.19 million) in pre-tax profits this year, only about half of the annual target we set at the beginning of the year." -- VNS

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