Vietnam to put lender under ‘special scrutiny’ after bank run

VIETNAM’S central bank will place Saigon Commercial Bank under “special scrutiny” after customers pulled their savings from its branches for several days last week.

The State Bank of Vietnam directed four banks to help manage Saigon Commercial Bank, also known as SCB, according to a statement from the regulator. SCB is the nation’s fifth-largest commercial lender by deposits and assets.

Last week, the central bank tried to calm markets after financial stocks plunged and SCB’s customers rushed to pull out deposits. The concerns were triggered by a police investigation into a real-estate conglomerate and fears the company might have ties to privately-held SCB.

“In order to stabilise SCB’s operations, the central bank decided to put the bank under special scrutiny,” the regulator said in the statement. SCB will operate under the supervision of the State Bank, which is assigning officials from the four lenders to manage SCB’s operations.

The four banks are the Bank for Foreign Trade of Vietnam, or Vietcombank, Bank for Investment and Development of Vietnam, or BIDV, Vietnam Bank for Agriculture and Rural Development, or Agribank, and Vietnam Joint Stock Commercial Bank For Industry and Trade, or VietinBank.

“The central bank will also coordinate with other relevant ministries to take necessary and comprehensive measures to ensure SCB’s operations are safe and sound,” according to the statement. 

Police on Oct 8 announced the detention of Truong My Lan, chairwoman of real estate conglomerate Van Thinh Phat Holdings Group, and other company officials for allegedly obtaining property through fraudulent means. 

Connections between SCB and Van Thinh Phat have not been officially acknowledged and previous local media reports citing the link have been taken down. In a statement, the bank said Lan “does not participate in the management and administration of SCB”. SCB has pulled down a link on its website that listed its board members.

State Bank Governor Nguyen Thi Hong said in a Monday (Oct 10) statement that deposits at banks, including those at SCB, are guaranteed by the government in all cases and urged customers to remain calm and not withdraw money.

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Almost 12 trillion dong (S$711 million) was deposited into SCB on Thursday, double the amount a day earlier, Thanh Nien news website reported, citing information from the central bank’s city branch. SCB increased interest rates for deposits to make them the highest in the domestic banking system to lure customers back. BLOOMBERG