Fraudulent Activities Rock Vietnam’s Banking Sector: S&P Global Ratings

A decade-long scam by a real estate developer has exposed corruption, fraud, and regulatory lapses in Vietnam’s banking sector, according to a report from S&P Global Ratings.

A Wake-Up Call for the Country’s Financial Authorities

The report highlights the failure of Saigon Commercial Bank (SCB) as a major wake-up call for Vietnam’s financial authorities. The central bank was forced to take extraordinary measures to maintain stability in the sector after Truong My Lan, a real estate developer, siphoned funds from SCB by placing accomplices in key positions and issuing loans to her related property companies.

The Scam Uncovered

The scam came to light in April 2024. Here are some key points about the scandal:

• How it happened: Truong My Lan, a real estate developer, siphoned funds from SCB by placing accomplices in key positions and issuing loans to her related property companies.
• Swift intervention: The central bank took extraordinary measures to maintain stability in the sector.

Fallout Contained

The report notes that the authorities’ swift intervention contained the fallout from SCB’s collapse, preventing it from escalating and undermining depositors’ confidence in the banking sector. A “flight-to-quality” scenario played out as deposits flowed from SCB to larger state-owned banks, with funds remaining within Vietnam’s banking sector.

Credit Analyst’s Praise

S&P Global Ratings credit analyst Ivan Tan praised the central bank’s decisive action, saying that quick intervention and significant support had restored financial stability. The report concludes that the crisis highlighted both significant lapses in corporate governance at SCB and the effectiveness of the central bank’s response.

Key Takeaways

• S&Ps report highlights corruption, fraud, and regulatory lapses in Vietnam’s banking sector.
• The failure of Saigon Commercial Bank (SCB) is a major wake-up call for Vietnam’s financial authorities.
• Swift intervention by the central bank contained the fallout from SCB’s collapse, preventing it from escalating.