It was a jarring image for one of the world’s fastest growing economies: Scores of Vietnamese flooded branches of the nation’s fifth-largest bank to pull out their savings amid rumors.
IT was a jarring image for one of the world’s fastest growing economies: Scores of Vietnamese flooded branches of the nation’s fifth-largest bank to pull out their savings amid rumors the lender was tied to a real estate conglomerate under investigation for fraud.
The benchmark VN Index fell as much as 2 percent Monday, the first day of trading after SCB was put under “special scrutiny.” JSC Bank for Foreign Trade of Vietnam lost as much as 3.2 percent while Tien Phong Bank, Bank for Investment and Development of Vietnam fell by at least 2.4 percent. Police on October 8 announced the detention of Truong My Lan, chairwoman of real estate conglomerate Van Thinh Phat Holdings Group, and other company officials in connection with an investigation into the issuance and trading of bonds of some companies where trillions of dong were allegedly appropriated in 2018 and 2019, according to the Public Security ministry. Lan couldn’t be reached for comment after her arrest, and Van Thinh Phat didn’t respond to earlier requests for comment.
The memory of past crises hangs heavy over Vietnam’s leaders. The country has done much to clean up its banking system since 2012, when a lending spree and weak controls led to a surge in bad debts, the arrest of bank executives and a plunge in stocks. Non-performing loans stood at 17 percent at the time.
Prime Minister Pham Minh Chinh directed commercial banks to comply with the law, strengthen governance and financial capacity while ensuring operational safety, according to a post on the government’s website, which cited Chinh at a Sunday meeting with banks leaders. Shortcomings in the stock, corporate bonds, and real estate markets have affected credit institutions, requiring more supervision, he said.
The latest investigations underscore “lingering risks” of bond misconduct in the banking and real estate markets, SSI Securities Corp., the nation’s second largest brokerage, said in a note to investors last week. “Although recent market corrections have partially reflected this news, we believe that negative sentiment will remain, especially when a large amount of corporate bond is set to due within 2023-2024.” With assistance from Karl Lester M.
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