Central bank put Saigon Commercial Bank under special control

The State Bank of Vietnam has placed Saigon Commercial Bank (SCB) under special control over stability concerns.

In a release Saturday, the SBV said that the move is a professional measure to strictly control and limit negative impacts on the private bank and the banking system.

The central bank will select and appoint qualified, capable and experienced personnel from state-owned commercial banks like Vietcombank, BIDV, Vietinbank, and Agribank to get involved in the corporate governance at SCB.

Vietcombank, BIDV, Vietinbank, and Agribank are “Big 4” banks. The first three have the state as majority shareholder, while the fourth is wholly state-owned.

The SBV will also coordinate with relevant ministries and agencies to synchronously implement necessary solutions for SCB to operate safely and healthily, it said.

In the Vietnamese banking industry's history, many banks have fallen under the central bank's special control, but later recovered and thrived.

Last Friday and Saturday morning, many SCB branches and transaction offices recorded a run on deposits due to concerns about the bank’s financial health.

The deposit withdrawals seemed 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 bank.

The SBV then released a statement confirming that “all deposits at local banks, including SCB, are guaranteed by the government no matter what.”

It recommended that depositors refrain from making withdrawals before the due date of term deposits in order to avoid the loss of interest.

SCB also clarified the arrest of Truong My Lan, chairwoman of property developer Van Thinh Phat Group, does not affect its business as she does not hold any executive role at the bank.

Last Friday, the bank increased its deposit interest rates for terms over nine months by one percentage point. Its rate for one-year term deposits was raised to 8.55%, the banking system's highest level.

Mid last week, the SBV’s Ho Chi Minh City branch stated that the situation at SCB was more stable.