Central bank plays down concerns over financial health of Saigon Commercial Bank

Vietnam’s central bank has pledged to keep the operations of Saigon Commercial Bank (SCB) stable and ensure the legitimate rights of depositors amidst a run on deposits since Friday.

The deposit withdrawals seem to have been triggered by news of the sudden death of Nguyen Tien Thanh, chairman and CEO of Tan Viet Securities. Thanh, 49, was an independent board member of the Ho Chi Minh City-headquartered SCB.

The State Bank of Vietnam, the nation’s central bank, recommended that depositors refrain from making withdrawals before the due date of term deposits in order to avoid the loss of interest. It stressed that it was keeping the whole banking system, including the SCB, stable.

Earlier this year, SCB signed a cooperation agreement with Tan Viet Fund Management JSC (TVFM), committing to prioritize using each other’s products and services.

Accordingly, SCB is the preferred partner of TVFM in providing products and services in capital mobilization transactions, domestic and foreign financial arrangements, investment transactions and investment cooperation.

TVFM is the preferred partner in businesses like investments, authorized investments, and asset management operations for SCB and its customers.

At that time, TVFM signed another agreement with Tan Viet Securities to perform cross-selling of the broker’s traditional products including fund certificates, and products from authorized investments.

In the market, Tan Viet Securities and SCB have also participated in the issuance of bonds by many enterprises. In such transactions, Tan Viet Securities was the issuance consultant, while SCB guaranteed payments.

SCB, an unlisted bank, is one of the largest lenders in Vietnam. As of the end of the second quarter, the bank's total assets were valued at more than VND760,000 billion ($31.82 billion), with total deposits exceeding VND595,440 billion (over $24.93 billion), up more than 16% compared to the beginning of the year. Its outstanding loans increased by 8% to VND389,790 billion ($16.32 billion) by that time.

Its January-June profit before tax was VND682 billion (over $28.55 million), up nearly 50% from a year earlier period. For years, it has been among the Vietnamese banks offering higher deposit rates.

Thanh was CEO of Tan Viet Securities since January 2016 and chairman since May 2019.

Nguyen Viet Cuong, a company board member, has been named Thanh’s replacement as new chairman and CEO at the broker. Since Tan Viet was established in 2006, its charter capital has quadrupled to VND2.64 trillion (more than $110.5 million).