Vietnam mounts rescue of SCB

Vietnam has mounted an “unprecedented” rescue of Saigon Joint Stock Commercial Bank (SCB), a lender engulfed in the nation’s biggest financial fraud, according to three bank documents and new official information provided to Reuters by a person with access to the papers.

“Without lending, SCB will collapse,” according to the information. “If the lending continues, the national treasury will dry up.”

Reuters is not identifying the source more specifically due to the sensitivity of the matter.

The new information described the situation as “unprecedented” for the massive volume of the cash injections, the complexity of the operation and the scale of existing and potential damage to

Vietnam’s financial system.

Reuters was unable to establish whether the conclusions about the impact on state coffers were broadly shared by other officials involved with monitoring SCB.

Vietnam’s public debt was stable last year at 37 per cent of gross domestic product, while the budget deficit widened to 4.4 per cent of gross domestic product. Foreign reserves were around US$100 billion at the end of the year, said the central bank. That is up from about US$90 billion at the end of October, according to the independent regional watchdog, Asean+3 Macroeconomic and Research Office.

As of the start of April, the central bank had pumped US$24 billion in “special loans” into SCB, according to one of the bank documents, which provides daily updates since March 29 on overall injections from the central bank.

Lending has slowed but averaged more than US$900 million a month in the past five months, according to that document, a second document with updates from March 15 to March 20, and a third document from November with monthly updates from October 2022 to October 2023.

The central bank did not reply to requests for comment about the rescue effort. The Finance Ministry referred a question to the central bank. SCB initially told Reuters it would circulate the news agency’s request for comment, but did not respond to subsequent emails. An SCB official declined to comment when contacted.