A Vietnamese property developer has put forward a 15-year plan to rescue Saigon Joint Stock Commercial Bank (SCB), the lender at the center of the country’s largest financial fraud, Reuters reports.
The proposal, outlined in internal documents, comes as Vietnam’s central bank has injected nearly $26 billion into SCB to keep it afloat following a 2022 bank run triggered by the arrest of a real estate tycoon.
According to documents reviewed by Reuters, the State Bank of Vietnam (SBV) has provided SCB with emergency loans equivalent to 5% of the country’s 2024 economic output. The bank remains heavily reliant on these special loans to cover withdrawals.
Sun Group, a major Vietnamese developer mandated by the central bank to lead SCB’s restructuring, has proposed a gradual repayment of these loans over a 15-year period. Under its plan, the repayment process would begin in the 14th year, depending on market conditions. Sun Group hopes to secure approval for the plan as early as next month.
Neither Sun Group, SCB, nor the Vietnamese government have publicly commented on the proposal. It remains unclear whether authorities will approve the plan within the suggested timeline.
SCB’s financial troubles began in October 2022 when authorities arrested real estate magnate Truong My Lan, who prosecutors say controlled the bank through proxies and used it to finance her empire. Investigators allege that she secured $44 billion in loans from SCB over a decade, leading to its financial instability. Her arrest triggered a mass withdrawal of deposits, forcing the central bank to intervene.
SCB’s financial position has continued to deteriorate. Deposits fell from 669 trillion dong ($26.3 billion) in October 2022 to just 19.2 trillion dong ($753 million) by the end of 2023. The bank’s capital adequacy ratio—an indicator of financial stability—plunged from minus 100% before the crisis to minus 176% by the end of 2024, according to Sun Group’s report.
Sun Group’s rescue plan includes an initial capital injection of at least 3 trillion dong ($120 million). The developer also plans to generate revenue by investing in government bonds and infrastructure projects while recovering funds from past loans.
To repay its debt to the central bank, SCB would sell recoverable assets, including land and properties used as collateral for loans. However, Sun Group’s report indicates that many of SCB’s assets were tied to shell companies controlled by Lan, often with inflated valuations, making full recovery uncertain.
Sun Group cites its banking experience as a key shareholder in National Citizen Commercial Joint Stock Bank since 2021 as a reason for its confidence in managing SCB’s revival.
The success of SCB’s restructuring will depend on several factors, including government approval, asset recovery efforts, and broader economic conditions. With Vietnam’s export-driven economy facing global trade risks, the stability of its banking sector remains a key concern.
As of February 2024, the central bank had lent SCB approximately 652.7 trillion dong ($25.6 billion), according to internal documents. While Sun Group’s roadmap aims to restore profitability, the long timeline and uncertainty surrounding asset recovery pose significant challenges.
The Vietnamese government has yet to make an official decision on the proposal, and the future of SCB remains uncertain as authorities weigh their options.
