Vietnam's Financial Turmoil: The SCB Saga

The Saigon Joint Stock Commercial Bank (SCB), embroiled in Vietnam's largest financial fraud, received a hefty bailout from the central bank. With plans to fully repay within 15 years, SCB remains dependent on special loans, facing challenges in restructuring amidst dwindling deposits and a tarnished capital adequacy ratio.

The Saigon Joint Stock Commercial Bank (SCB), at the heart of Vietnam's largest financial scandal, has been granted a significant bailout by the central bank, accounting for 5% of the nation's 2024 economic output. The bailout aims to stabilize SCB following the 2022 arrest of a real estate tycoon who had control over the bank.

Since the scandal broke, the SCB has relied heavily on special loans from the State Bank of Vietnam to manage deposit withdrawals. The central bank plans to lend 657 trillion dong ($25.8 billion) for the first year of SCB's restructuring, with repayment expected to start in the 14th year, as outlined in Sun Group's undisclosed roadmap.

The bank's drastic challenges include a drop in deposits from 669 trillion to 19.2 trillion dong and a worsening capital adequacy ratio. Sun Group, appointed to guide SCB's restructuring, aims to inject 3 trillion dong and turn the bank profitable through investments in government bonds and infrastructure projects.

(With inputs from agencies.)