In Vietnam, the main bank involved in the country's largest financial fraud has been bailed out by the central bank with an amount equivalent to 5% of the nation's economic output in 2024, as per documents obtained by Reuters. The money, totaling nearly $26 billion, was injected into Saigon Joint Stock Commercial Bank (SCB) following a bank run in 2022 after the arrest of a real estate mogul who controlled SCB. This incident reflects the challenges Vietnam faces in regulating its banks and managing potential risks within the sector.
Amidst domestic turmoil and amid threats of a global trade war due to tariffs imposed by President Donald Trump, SCB relies heavily on special loans from the State Bank of Vietnam to cover deposit withdrawals. According to a rescue plan devised by Sun Group, a developer appointed by the central bank in November 2023 to assist SCB, the central bank's lending would reach 657 trillion dong ($25.8 billion) in the first year of restructuring.
In the rescue scenario laid out by Sun Group, which has not been made public before, SCB, now under Sun Group's ownership, aims to begin repaying the central bank in the 14th year of the rescue plan, contingent on market conditions. The plan envisages full repayment to the central bank within 15 years of the restructuring approval, a milestone Sun Group is hoping to achieve as early as the following month.
It is unclear whether Sun Group's plan, dated February 17, has official backing from Vietnam's government and Communist party, or whether it will be endorsed within the developer's suggested timeframe. Requests for comments from Sun Group, SCB, the central bank, and the finance ministry went unanswered.
The scandal unfolded in October 2022 with the arrest of Truong My Lan, a businesswoman who allegedly funded a real estate empire with $44 billion in SCB loans over a decade. Lan's arrest, as she controlled one of Vietnam's largest commercial banks by deposits through proxies, led to a panic among depositors, prompting the central bank to inject $4 billion in the immediate aftermath of her arrest, with further funds injected later to prevent the bank from collapsing. In December, Lan's death sentence was upheld by a court, following her conviction for embezzlement and bribery.