Banks continuously change CEOs, creating vicious circle

Banks continuously change CEOs, creating vicious circle

VietNamNet Bridge – Many CEOs have left their offices to hand over power to newcomers. But the newcomers have also left after short, several-month stays. The CEO seats have changed owners regularly.

It was a surprise to many people that Eximbank has once again gotten a new CEO. Nguyen Quoc Huong, who succeeded Truong Van Phuoc, an experienced and well-known banker, had to leave the bank four months after taking office.

Huong began working as the acting CEO of Eximbank in September 2013 and became the official CEO in December.

Eximbank’s new CEO is Pham Huu Phu, a familiar face in the banking sector.

Phu was the Deputy Chair of Eximbank’s Board of Directors in 2008-2012. From 2012 to April 2014, Phu, representing Eximbank, held the post as Chair of Sacombank’s Board of Directors. Eximbank is a major shareholder of Sacombank.

The Eximbank’s 2014 shareholders’ meeting has decided that Phu will return to hold the position of CEO.

“This is really good news,” a shareholder said on the sideline of Eximbank’s shareholders’ meeting. The reason for the shareholder’s enthusiasm is simple: Sacombank, under the Phu’s “rein”, obtained satisfactory business results. Sacombank’s shareholders received a high dividend of 16 percent in 2013. at the same time, Eximbank’s shareholders received a paltry 4 percent.

A series of other banks have also announced changes in key personnel. VIB, for example, has had four CEOs just within two years. In the first nine months of 2013 alone, the bank changed CEOs twice.

Duong Thi Mai Hoa was the first CEO who resigned from the post, in January 2013. The second was Dam Bich Thuy, who stepped down in September. Han Ngoc Vu, who is Chair of the Board of Directors, now has to undertake the management task.

Techcombank is also facing big difficulties when seeking CEOs. After Nguyen Duc Vinh, a well-known banker who had held the post of CEO at Techcombank for many years, left, his seat was taken over by a foreign CEO, Simon Morris from the UK. However, in August 2013, the foreign CEO had to concede the seat to a Vietnamese, Do Tuan Anh, a member of the Board of Directors.

A common factor among banks changing CEOs frequently: boards of directors that are not satisfied with the business results.

Techcombank, for example, saw pretax profits down by 13.7 percent in 2013 and by 75.9 percent in 2012. As for VIB, its pretax profit in 2013 was just equal to 11.5 percent of that gained in 2012.

Analysts affirm that it is quite normal for CEOs to be pushed out when business results are unsatisfactory. But they also suggest that by changing CEOs, banks have created a vicious circle.

It is the regular personnel changes, they say, that often leads to instability and bad business performance.

They commented that there exists a “bank CEO crisis“. Dong A Bank spent many years to train potential CEOs to succeed Tran Phuong Binh. However, Binh has remained in the position for the last many years, even though he is believed to be a better strategist than a manager.

NCDT

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