Vietnam mounts huge US$24bil rescue for bank engulfed in fraud

SCB is engulfed in the nation’s biggest financial fraud. — Reuters

HANOI: Vietnam has mounted an “unprecedented” rescue of Saigon Joint Stock Commercial Bank (SCB), a lender engulfed in the nation’s biggest financial fraud, according to three bank documents and new official information provided to Reuters by a person with access to the documents.

“Without lending, SCB will collapse,” according to the new information provided. “If the lending continues, the national treasury will gradually dry up.”

Reuters is not identifying the source more specifically due to the sensitivity of the matter.

The new information also described the situation as “unprecedented” for the massive volume of the cash injections, the complexity of the operation and the scale of existing and potential damage to Vietnam’s financial system.

Reuters was unable to establish whether the conclusions about the impact on state coffers were broadly shared by other officials currently involved with monitoring SCB.

Vietnam’s public debt was stable last year at 37% of gross domestic product (GDP), while the budget deficit widened slightly to 4.4% of GDP.

Foreign reserves were around US$100bil at the end of the year, according to the central bank. That is up from about US$90bil at the end of October, according to the independent regional watchdog Asean+3 Macroeconomic and Research Office.

As of the start of April, the South-East Asian nation’s central bank had pumped US$24bil in “special loans” into SCB, according to one of the bank documents seen by Reuters, which provides daily updates since March 29 on overall injections from the central bank.

Lending has slowed slightly but averaged more than US$900mil a month in the past five months, according to that document, a second document with updates from March 15 to March 20, and a third document from November with monthly updates from October 2022 to October 2023.

The central bank did not reply to requests for comment about the rescue effort. The finance ministry referred a question to the central bank. — Reuters