Vietnam central bank pumps cash to save troubled lender SCB

By Quang Minh
Sat, April 20, 2024 | 5:15 pm GMT+7

Vietnam’s central bank has pumped in money to support Saigon Commercial Bank (SCB), which experienced a run triggered by the arrest of real estate tycoon Truong My Lan in October 2022.

Lan, chairwoman of the Van Thinh Phat Group, now on death row, was found to control more than a 90% stake in SCB and have caused over VND677 trillion ($26.6 billion) in damage to the bank.

Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, said at a press meet Friday that it is incumbent on a government or a central bank to make prompt interventions when a commercial bank is in trouble.

 An SCB branch pictured before the bank run in October 2022. Photo courtesy of SCB.

An SCB branch pictured before the bank run in October 2022. Photo courtesy of SCB.

Such interventions aim to ensure that the trouble bank does not collapse or otherwise pose risks to the national financial system or the banking system, Tu said in response to a question on liquidity support provided for SCB after the SCB-Van Thinh Phat scandal broke out.

Reuters reported Wednesday that the SBV had pumped $24 billion in “special loans” into SCB as of the beginning of this month in an “unprecedented” rescue effort.

Tu noted that SCB was not the first bank that needed SBV injections. The SBV has had to step in to save several ailing banks that were placed under special control over the past 10 years.

“This is an economic rule and it can be seen elsewhere in the world, not just Vietnam,” he stressed.

At the press meet, Tu did not mention the amount injected into the SCB, but said the bailout package included loans and that the central bank had taken proper action to regulate such injections.

“SCB is a large-sized bank, with a great number of total assets. Therefore, it required large enough solutions.

“We will continue to build a roadmap to restructure SCB gradually while figuring out mechanisms to help SCB stabilize operations, recover, and return to normal,” Tu said.

SCB was formed in 2011 with the merger of three commercial banks at the SBV’s request. As of end-2020, SCB had total assets of VND633.79 trillion ($25 billion), becoming the largest private bank and among the five largest lenders in the country alongside four state-owned peers.

According to its mid-year consolidated financial statements, its total assets amounted to VND761 trillion ($30 billion) at end-June 2022, before the bank was placed under special control.

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