Saigon Commercial Bank failure reveals fraud in Vietnam’s banking sector
A real estate developer was found to have siphoned funds from SCB for almost a decade.
The failure of Saigon Commercial Bank (SCB) exposed corruption, fraud, and regulatory violations in the banking sector of Vietnam, S&P Global Ratings reported.
"The event has revealed both significant lapses in corporate governance at the lender, and decisive action by the central bank to take extraordinary measures to maintain stability in the sector,” S&P Global Ratings credit analyst Ivan Tan said.
"The central bank's fast actions contained the fallout from SCB. The lender is now under state control. The authorities swiftly stemmed a run on the institution, before it could escalate and undermine depositors' confidence in the banking sector," Tan added.
The report noted that in April 2024, Truong My Lan, a real estate developer siphoned funds from the SCB. This is accomplished through placing accomplices in key positions and giving out loans to her related property.
“A flight-to-quality scenario played out in which deposits flowed from SCB to larger, state-owned banks. Importantly, however, these funds remained within the country's banking sector,” the report read.
“We believe that quick intervention and significant--albeit costly--support had restored financial stability.”