By Francesco Guarascio
HANOI (Reuters) – The bank at the centre of Vietnam’s biggest financial fraud has received a central bank bailout amounting 5% of the nation’s 2024 economic output, which a local white knight hopes to repay in 15 years, documents seen by Reuters show.
The nearly $26 billion pumped into Saigon Joint Stock Commercial Bank (SCB) since a 2022 run on the bank, triggered by the arrest of the real estate tycoon who effectively controlled SCB, highlights Vietnam’s struggles to oversee its banks and contain potential sectoral risk.
The Southeast Asian nation is scrambling domestically while its export-driven economy faces the risks of a global trade war as President Donald Trump imposes tariffs on U.S. trading partners.
SCB remains “completely dependent on special loans” from the State Bank of Vietnam to cover deposit withdrawals, and the central bank’s lending would reach 657 trillion dong ($25.8 billion) in the first year of restructuring, according to the rescue roadmap prepared by Sun Group, the developer mandated by the central bank in November 2023 to help SCB.
The lender, under Sun Group ownership, would start repaying the central bank in the 14th year of the rescue plan, subject to market conditions, under the base scenario of the 222-page plan, which has not been reported previously.
Under this scenario, SCB would fully repay the central bank within 15 years of the approval of the restructuring, which Sun Group hopes to obtain as early as the start of next month.
Reuters could not determine whether Sun Group’s plan, dated February 17, has the support of Vietnam’s government and ruling Communist party or whether it will be approved under the developer’s timeline.
Sun Group, SCB, the central bank and the finance ministry did not respond to email and phone requests for comment.
DEPOSITS PLUNGE, LOSSES SOAR
The scandal broke in October 2022 with the arrest of businesswoman Truong My Lan, who built a real estate empire that prosecutors say was funded for a decade by $44 billion in SCB loans.
The arrest of Lan – who used proxies to control what was one of Vietnam’s largest commercial banks by deposits – triggered a panic among depositors, prompting the central bank to inject $4 billion in the three weeks after the arrest and billions more later to keep the bank from collapsing, according to a document seen by Reuters.
A court upheld Lan’s death sentence in December, rejecting her appeal against a conviction for embezzlement and bribery, state media reported.
