Nguyen Duc Kien, 48, was a founder of the Asia Commercial Bank and had interests in Vietnamese football. He was arrested for conducting "business illegally". For the bank, it is a "personal matter," even as its share price drops. Benchmark share index takes biggest plunge since October 2008.

Hanoi (AsiaNews/Agencies) - Vietnamese police arrested one of Vietnam's foremost bankers on undisclosed financial charges. Nguyen Duc Kien has interests, among other things, in football and is a key figure in the world of business and politics in Hanoi. When he was taken into custody a few days ago, the news sent shockwaves among investors. Shares touched their lowest point in four years. Experts note that the affair is indicative of the country's fragile and vulnerable financial system.

Kien, 48 (picture), who helped found Asia Commercial Bank (ACB), one of Vietnam's most important private banks, used his role as chairman of the Hanoi Football Club to launch harsh attacks against the Vietnam Football Federation with charges of corruption. Now, police are investigating violations at three companies he managed, after he allegedly "conducted business illegally." The nature of the charges has not been disclosed.

The arrest has caused a sensation in Vietnam's business community, in particular in financial circles. The benchmark VN Index on the Ho Chi Minh City Stock Exchange fell 2.1 percent, extending yesterday's 4.7 percent plunge, the biggest drop since October 2008.

Shares in ACB lost 6.6 per cent in Hanoi trading after tumbling 7 per cent yesterday, the maximum daily drop permitted by the Hanoi Stock Exchange.

ACB issued a statement saying the arrest would have no impact on its performance. Bank spokesman Nguyen Thanh Toai described the arrest as "a personal issue".

In fact, the arrest appears to be related to an internal power struggle in the Communist party's leadership. Kien was close to Prime Minister Nguyen Tan Dung, who is involved in a tug-of-war with Vietnamese President Truong Tan Sang for control of the party.

Political analysts and experts believe the financial tycoon's fall from grace will not unduly affect the prime minister or undermine the system, but it does provide a rare glimpse in the tensions that are affecting the party.

Vietnam had become another emerging Asian economy in recent years, comparable to Taiwan and South Korea. Now, concerns about its financial system have cast a long shadow on the nation's development.

Doubts about the country's stability have been further aggravated by inflation, a weaker local currency, a decline in foreign investments and the negative state of the world's economy.

• vietnam
• banking
• economy
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