Cross-ownership in Vietnam banks a headache seen from Van Thinh Phat-SCB scandal

By Dinh Vu, Minh Hue
Mon, November 20, 2023 | 1:50 pm GMT+7

The scandal surrounding real estate developer Van Thinh Phat Group and Saigon Commercial Bank (SCB) shows that violations in cross-ownership and cronyism have become complicated and increasingly sophisticated, posing a huge challenge for regulators when it comes to preventing businesses from controlling banking activities.

The investigative agency under the Ministry of Public Security has issued a conclusion on its investigation into the case of embezzlement; violating regulations on banking and other related activities; giving and receiving bribes; abusing positions and power while performing official duties; showing a lack of responsibilities causing serious consequences; and abusing trust for property appropriation at Van Thinh Phat, SCB and relevant units and organizations.

A transaction office of Saigon Commercal Bank (SBC) in District 1, Ho Chi Minh City, southern Vietnam. Photo courtesy of the Ministry of Public Security's investigative agency.

A transaction office of Saigon Commercal Bank (SBC) in District 1, Ho Chi Minh City, southern Vietnam. Photo courtesy of the Ministry of Public Security's investigative agency.

Truong My Lan, chairwoman of Ho Chi Minh City-based Van Thinh Phat, has been accused of controlling operations at SCB to appropriate over VND304 trillion ($12.53 billion).

The Ministry of Public Security's investigative agency also proposed prosecuting Lan for giving bribes, violating regulations on banking activities, and embezzlement.

According to the conclusion, from December 2011 to January 1, 2012, Lan held a 81.43% stake at SCB under the names of 32 shareholders; 98.74% of the shares in TinNghiaBank under the names of 36 shareholders, and a 80.46% stake at First Commercial Joint Stock Bank under the names of 24 shareholders.

The three banks were merged on January 10, 2012 under the name of Saigon Commercial Bank (SCB), and Lan asked 73 shareholders to hold 85.606% of SCB's shares on her behalf. She then bought more shares to increase her ownership ratio in the bank to 91.545% on January 1, 2018.

As of October 2022, SCB had a charter capital of VND15.23 trillion ($630 million) with a total of 4,129 shareholders recognized by the State Bank of Vietnam. In particular, Lan owned nearly 91.536% of the bank’s charter capital in the names of 27 legal entities and individuals. She directly owned 4.982%.

Lan did not hold a position at SCB but owned a controlling stake of 85% to 91.5% at the bank. With this stake, she arranged for people she trusted to be given key leadership positions on SCB’s board of directors and executive board, giving her control of all the activities at the bank.

Lan was accused of using SCB to raise capital, then directed her subordinates at the bank and Van Thinh Phat to prepare loan documents to take money from depositors, said investigators.

Cross-ownership problem difficult to solve

The SCB-Truong My Lan case will go down in the history of the banking industry as causing unprecedented losses.

Previous major bank manipulation cases such as OceanBank-Ha Van Tham, Vietnam Construction Bank (VNCB)-Pham Cong Danh, TrustBank-Hua Thi Phan, Southern Bank-Tram Be posted losses of only several to tens of trillions of Vietnam dong (VND1 trillion = $41.34 million), while the figure in this case reached hundreds of trillions, equivalent to 6% of Vietnam's GDP, larger than the combined assets of Vietnam's five dollar billionaires.

Speaking at a September 18 meeting of the National Assembly Standing Committee on cross-ownership and large shareholders’ control of banking operations, SBV Governor Nguyen Thi Hong said cross-ownership and cronyism are limitations facing the banking system.

Being aware of this problem, the Party Central Committee, National Assemby and Government have repeatedly asked for a legal framework on this issue, she said.

“There will never be a regulation that can thoroughly solve this problem. Instead, such regulation must be included in not only the Law on Credit Institutions, but also other legal documents to ensure transparency in the operations of banks, businesses and people,” she said.

Regarding a proposal to reduce the ownership ratio in a credit institution, Hong said that it is difficult to control the ownership ratio of individuals and businesses if they intentionally let others take the name. This needs the involvement of investigative agencies, she noted.

Major cases that have been brought to light show that an individual controlling a bank can have an "underground" ownership rate of up to 60-70%, and even over 90%. They sometimes do not directly hold any positions at the bank but make decisions about credit granting, lending activities, and improper use of capital. These violations often take place over a long period of time and are becoming increasingly complex and large in scale.

Comments (0)
  • Read More
Indonesia to end incentives for imported CBU BEVs in 2026

Indonesia to end incentives for imported CBU BEVs in 2026

The Indonesian government has confirmed that it will stop providing incentives for imported completely built-up (CBU) battery electric vehicles (BEVs) from 2026.

Southeast Asia - Tue, September 16, 2025 | 9:44 pm GMT+7

Aquatic sector advised to navigate challenges, secure exports to EU, US

Aquatic sector advised to navigate challenges, secure exports to EU, US

Despite positive production signals with growth in 2025 projected at 4.25%, Vietnam's aquatic sector is facing mounting export pressures, particularly strict technical barriers in major markets such as the EU and the U.S.

Companies - Tue, September 16, 2025 | 9:41 pm GMT+7

Vietnam pledges favorable conditions for UK businesses

Vietnam pledges favorable conditions for UK businesses

Finance Minister Nguyen Van Thang has affirmed Vietnam’s commitment to improving its investment environment and creating favourable conditions for foreign enterprises, including those from the UK.

Companies - Tue, September 16, 2025 | 9:29 pm GMT+7

Lotte Shopping plans to open more shopping malls in Vietnam

Lotte Shopping plans to open more shopping malls in Vietnam

South Korean retail giant Lotte Shopping has unveiled plans to open an additional two to three large-scale shopping malls in major Vietnamese cities by 2030, underscoring the country’s growing role in the group’s international expansion strategy.

Companies - Tue, September 16, 2025 | 9:25 pm GMT+7

Vietnam ratifies WTO Agreement on Fisheries Subsidies

Vietnam ratifies WTO Agreement on Fisheries Subsidies

Vietnam officially deposited its instrument of ratification of the Agreement on Fisheries Subsidies at the WTO General Council’s special session in Switzerland on Monday.

Companies - Tue, September 16, 2025 | 9:21 pm GMT+7

What makes NobleGo - Vietnam’s first home-bidding livestream platform - so notable?

What makes NobleGo - Vietnam’s first home-bidding livestream platform - so notable?

NobleGo – Vietnam’s pioneering AI-powered livestream real estate bidding platform developed by Sunshine Group – has completed its first 20 livestream sessions.

Real Estate - Tue, September 16, 2025 | 4:53 pm GMT+7

Japanese retailer Aeon to debut another northern Vietnam shopping mall by end-2026

Japanese retailer Aeon to debut another northern Vietnam shopping mall by end-2026

Japanese-backed Aeonmall Vietnam is ramping up construction on its Aeon Mall Ha Long project in Quang Ninh province, home to Ha Long Bay, with an aim to open it to the public by end-2026.

Industries - Tue, September 16, 2025 | 3:54 pm GMT+7

Hanoi terminates Vinaxuki auto plant project, repurposes land for commercial complex

Hanoi terminates Vinaxuki auto plant project, repurposes land for commercial complex

A long-stalled automotive manufacturing project by Xuan Kien Auto JSC (Vinaxuki) has been officially terminated by Hanoi authorities, and the reclaimed land in Phuc Thinh commune will be repurposed for a new commercial and service complex.

Industries - Tue, September 16, 2025 | 2:44 pm GMT+7

Central Vietnam province reviews investment proposal for thermal power project after Thai EGATi pullout

Central Vietnam province reviews investment proposal for thermal power project after Thai EGATi pullout

Authorities in the central province of Quang Tri are evaluating a proposal from Power Generation JSC 1 (EVNGENCO 1), a subsidiary of state utility Vietnam Electricity (EVN), to take over the Quang Tri thermal power plant project, following the withdrawal of Thai investor EGATi.

Energy - Tue, September 16, 2025 | 1:44 pm GMT+7

Amata to sell stakes worth $46 mln in Vietnam units to Novaland-tied buyers

Amata to sell stakes worth $46 mln in Vietnam units to Novaland-tied buyers

Amata VN, the Vietnam arm of Thailand’s leading industrial park developer Amata, has approved a plan for its subsidiary Amata City Long Thanh Urban JSC (ACLT) to sell its remaining 51% stakes in two entities to local developer Novaland-linked buyers.

Real Estate - Tue, September 16, 2025 | 12:19 pm GMT+7

Vietnam already meets FTSE's criteria for stock market status upgrade: Finance Minister

Vietnam already meets FTSE's criteria for stock market status upgrade: Finance Minister

Vietnam has fulfilled the criteria for a stock market status upgrade by FTSE Russell through reforms aimed at facilitating foreign investment inflows into its market, said Minister of Finance Nguyen Van Thang.

Economy - Tue, September 16, 2025 | 9:36 am GMT+7

Banks should be allowed to distribute, invest in mutual fund certificates: Vietnam's finance ministry

Banks should be allowed to distribute, invest in mutual fund certificates: Vietnam's finance ministry

The Ministry of Finance is proposing a key reform that would allow commercial banks to invest in and distribute mutual fund certificates, as part of a broader plan to restructure the investor base and foster the development of Vietnam’s fund management industry.

Finance - Tue, September 16, 2025 | 8:00 am GMT+7

E-commerce boom a major driver of Vietnam's packaging paper industry growth

E-commerce boom a major driver of Vietnam's packaging paper industry growth

Vietnam's paper packaging industry is entering a period of strong growth, with an average annual growth rate forecasted at 10% until 2030.

Companies - Mon, September 15, 2025 | 10:20 pm GMT+7

Vietnam needs support from UK in developing international financial center: Deputy PM

Vietnam needs support from UK in developing international financial center: Deputy PM

Permanent Deputy Prime Minister Nguyen Hoa Binh has called on the UK and the City of London to continue supporting and accompanying Vietnam in promoting and introducing its international financial center (IFC).

Finance - Mon, September 15, 2025 | 10:12 pm GMT+7

Vietnam enforces 8% capital adequacy ratio for banks from Sept 15

Vietnam enforces 8% capital adequacy ratio for banks from Sept 15

Commercial banks and foreign bank branches in Vietnam must maintain a minimum capital adequacy ratio (CAR) of 8%, including at least 4.5% in Tier 1 core capital and 6% in Tier 1 capital, starting from September 15.

Banking - Mon, September 15, 2025 | 10:04 pm GMT+7

Tool for wood traceability management debuts in Vietnam

Tool for wood traceability management debuts in Vietnam

The Vn-WoodID application has been officially launched in Vietnam, becoming a key tool contributing to wood traceability.

Companies - Mon, September 15, 2025 | 10:00 pm GMT+7