(6 June 2024 – Vietnam) A 2022 failure of a commercial bank in Vietnam has given way to S&P Global Ratings highlighting issues with widespread corruption, fraud, and regulatory violations within the sector.
Saigon Commercial Bank collapsed in late 2022 due to issues centred around fraudulent loans given to the bank’s chairperson, totalling greater than 90 percent of the bank’s loan portfolio. The collapse had immediately given way to instability in the sector and forced the Vietnamese Central Bank (VCB) to act in a rapid manner, seizing control of the bank and stemming outflows of deposits.
The size and scale of the fraud has pushed the VCB to tighten its regulatory oversight within the sector and highlighted a widespread lapse in corporate governance and supervisory oversight.
Despite the incident that nearly left tens of thousands of depositors out of pocket, S&P Global praised the actions of the VCB, which deployed special loans of US$24 billion to the distressed bank, equivalent to 5.5 percent of Vietnam’s 2023 GDP, and assigned senior officials from state owned banks to manage operations.
“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,” commented S&P Global Ratings credit analyst Ivan Tan.