Contradiction of events
Normally, appointment of new Chairman of Board of Directors at Eximbank takes place when there are only a few days left for the Annual General Meeting of Shareholders (AGM). As expected, Eximbank will hold two consecutive meetings including an Annual General Meeting of Shareholders for 2020 and the Extraordinary General Meeting of Shareholders on the same day on 30 June, in order to cover for two cancelled meetings of 5 March and 22 April, due to the Covid-19 pandemic.
Interestingly, the newly appointed Chairman is a person whose foreign strategic shareholder Sumitomo Mitsui Banking Corporation (SMBC) is holding 15% of capital in Eximbank, and wanted to be relieved of the position of Vice Chairman not too long ago. Specifically, SMBC had sent a written request to the Board of Directors to hold a direct meeting to discuss two specific issues, namely, a request to dismiss Mr. Yasuhiro Saitoh and reduce number of members, and for a vote of confidence by the Board of Directors.
This contradiction of events is now becoming an issue, because previously Mr. Yasuhiro Saitoh was a representative of SMBC at Eximbank. Last year, SMBC sent a document to the Board of Directors of Eximbank to notify that Mr. Yasuhiro Saitoh was not a staff or authorized personnel or representative of SMBC from 18 May 2019. So now whether or not a dispute breaks out at the upcoming General Meeting of Shareholders is a question that is being heavily debated.
There was clearly a dispute among faction of shareholders. Indeed, for Eximbank, the dispute between groups of shareholders to appoint a Chairman of Board of Directors has become a familiar story for years. In 2015, when the Board of Directors term expired, the bank needed to re-elect all members of the Board of Directors for the new term from 2015 to 2020. However, as the date of the AGM came closer, the bank had not yet received State Bank of Vietnam approval for list of members for Board of Directors and the Supervisory Board for the new term. In 2016, there was again a dispute over the seats on the Board of Directors among shareholder groups and has continued until now.
In March 2019, the Board of Directors of Eximbank issued a resolution to elect Ms. Luong Thi Cam Tu, a member of Board of Directors as Chairman of Board, but Mr. Le Minh Quoc, former Chairman of Board of Directors of Eximbank sued and asked the People's Court in Ho Chi Minh City to apply emergency measures to temporarily stop the resolution to elect Ms. Tu as Chairman of the Board.
On 22 May 2019, the Board of Directors again issued a resolution to elect Mr. Cao Xuan Ninh, another member of the Board, to hold position of Chairman of Board of Directors for the fourth term from 2015 to 2020. Less than one month on the hot seat, Mr. Ninh's resignation letter stated shareholder issues and with the group of shareholders in too many disagreements that were difficult to reconcile and which led to internal disputes that caused great difficulties in management and administration, negatively affecting the image and operation of the bank, Mr. Ninh's resignation was accepted.
In a statement issued on 25 June, Eximbank affirmed that the bank was operating stably, effectively and in well control of operations. This confirms that during the time of Mr. Cao Xuan Ninh as Chairman of Board of Directors, the bank operated responsibly and effectively. Since then, Eximbank has shown positive and remarkable results in 2019 and created momentum for the results of the first quarter of 2020. Specifically, profit before tax increased 31% over the same period, and operating costs decreased 7% over the same period. Currently, capital adequacy ratios of the bank are controlled at a high level of safety.
However, the growth of business operations cannot save the Eximbank brand when senior personnel are suddenly shunted off, reflecting a serious internal instability that has persisted in the area of governance for many years. The bank also acknowledged that over the past few years, the Board of Directors has held many meetings to approve a number of contents within the authority of Board of Directors. In particular, a few sessions have generated different opinions related to procedures, legal orders and validity of related minutes and resolutions. This situation reflects the true differences between Board members.
In the past, Eximbank was a leading joint stock commercial bank in Vietnam, but in the last five years, a series of disruptions at the Board of Directors level have caused this major brand to fall, and also fall out of a group of five largest commercial banks in Vietnam. Now Eximbank is infamously known as the most chaotic bank.
In a document for the Annual Shareholders Meeting scheduled to be held on 30 June, the Supervisory Board of Eximbank stated that management activities during the last term as well as in 2019, were not running smoothly. The Board members conflicted over many different opinions, and meetings often lasted longer without any final conclusions. The above reasons led to a slow down of important issues at the bank, typically the appointment of the General Director and the legal representative of Eximbank, resulting in Eximbank being administratively sanctioned which greatly affected the image of the bank.
Recent disputes have shown that large groups of shareholders still do not want to be stable if they have not achieved their wishes, and while the SBV did not intervene between shareholders, the internal disputes at Eximbank continue with no resolution in sight.