Saigon Joint Stock Commercial Bank (SCB), the institution at the heart of Vietnam’s largest financial fraud case, has received a bailout from the State Bank of Vietnam (SBV) amounting to 5% of the country’s 2024 GDP.
Sun Group, a leading Vietnamese developer, has proposed a 15-year restructuring plan to repay the bailout, according to documents reviewed by Reuters.
Massive Bailout Exposes Banking Sector Challenges
Since 2022, nearly $26 billion has been injected into SCB to prevent its collapse following the arrest of real estate mogul Truong My Lan, who was found to have used SCB as a private funding vehicle for her business empire. The crisis has underscored weaknesses in Vietnam’s banking oversight and raised concerns about systemic financial risks.
SCB remains heavily reliant on emergency loans from the SBV to cover deposit withdrawals. According to Sun Group’s proposed roadmap—prepared in November 2023 after it was appointed to lead SCB’s restructuring—the bank would require 657 trillion VND ($25.8 billion) in special loans in the first year of the rescue plan.
Under the base scenario outlined in the 222-page plan, SCB would begin repaying the SBV in the 14th year of restructuring, contingent on market conditions. Full repayment is expected within 15 years from the approval of the restructuring, which Sun Group hopes to secure as early as next month.
Uncertainty Over Government Backing
It remains unclear whether Sun Group’s proposal has the support of Vietnam’s government and Communist Party or whether it will be approved within the developer’s proposed timeline. Neither Sun Group, SCB, the central bank, nor the finance ministry responded to requests for comment.
SCB’s Decline: Plunging Deposits and Mounting Losses
SCB’s downfall began in October 2022, when authorities arrested Truong My Lan, who had covertly controlled the bank using proxies. Prosecutors revealed that she had secured $44 billion in loans from SCB over a decade to finance her real estate empire.
The arrest triggered a bank run, forcing the SBV to inject $4 billion within the first three weeks alone, with additional funds following to stabilize SCB.
By the end of 2024, SCB’s deposits had plummeted to just 19.2 trillion VND ($770 million), a sharp decline from 669 trillion VND ($26.8 billion) at the time of the bank run in October 2022.
Vietnam’s banking regulations require financial institutions with subsidiaries—like SCB—to maintain a capital adequacy ratio (CAR) of at least 9% to safeguard against losses. However, SCB’s CAR had already fallen to negative 100% before the crisis and deteriorated further to negative 176% by the end of 2024, according to Sun Group’s report.
Can SCB Return to Profitability?
Documents from Vietnam’s police presented at Lan’s trial revealed that as early as 2017, SCB’s actual CAR was negative 4.2%, despite the bank publicly reporting a positive ratio of around 10%. Auditing firm Deloitte, which signed off on SCB’s financial statements at the time, has not commented on these findings.
As of February 18, 2025, the central bank had injected 652.7 trillion VND ($25.6 billion) into SCB, according to an internal document obtained by Reuters.
Sun Group, which has held a stake in National Citizen Commercial Joint Stock Bank (NCB) since 2021, cites its banking experience as a key factor in its ability to turn SCB around. The developer has pledged to invest at least 3 trillion VND ($120 million) into SCB’s charter capital as part of the restructuring.
The proposed rescue plan outlines a multi-pronged revenue strategy, including:
- Investments in government bonds and infrastructure projects using recovered assets.
- Selling collateral and land rights from loans issued by SCB.
- Profits from new investments in the financial sector.
However, the report warns that only a small portion of SCB’s assets are recoverable. The majority of its loan portfolio consisted of loans to shell companies linked to Truong My Lan, secured against inflated collateral values.
Looking Ahead
Vietnam is navigating domestic economic challenges while facing external risks, including potential disruptions to its export-driven economy due to global trade tensions. The SCB crisis has raised fresh concerns about financial stability, regulatory oversight, and the long-term impact of state intervention in the banking sector.
The fate of Sun Group’s proposed rescue plan—and whether SCB can truly recover—will depend on regulatory approvals, market conditions, and the ability to reclaim lost assets.
For now, SCB remains Vietnam’s largest-ever banking bailout case, a stark reminder of the risks in the country’s fast-growing financial sector.
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Source: Vietnam Insider