- Saigon Commercial Bank hikes deposit rates to lure customers
- Police probe into real estate conglomerate tied to panic
October 11, 2022 at 11:27 AM GMT+7 Updated on
The operations of Saigon Commercial Bank, which faced days of panicked customers pulling out their savings, are “stable” and some clients are now returning to deposit money, according to Vo Minh Tuan, head of the central bank’s Ho Chi Minh City branch.
“SCB’s situation has become more stable now as the number of people coming in to withdraw money has decreased,” he said by phone. The central bank on Monday issued a statement reaffirming the lender’s ability to pay depositors.
Hundreds of bank customers rushed to branches to pull money out after police over the weekend 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. The conglomerate was believed to have ties to Saigon Commercial Bank, the nation’s fifth-largest commercial bank by deposits and assets.
SCB’s branches in the nation’s commercial hub of Ho Chi Minh City were significantly quieter Tuesday morning, with some workers saying operations were returning to normal.
“The number of people coming in to deposit their money has increased after messages from the State Bank and SCB’s raising of interest rates on deposit terms,” according to an emailed statement from SCB. The rate increase began Oct. 8, it said.
The bank increased interest rates by 1 percentage point for deposits of over 9 months, among the highest in the domestic banking system, news website VnExpress reported.
The police detentions were in relation to an ongoing investigation into the issuance and trading of bonds of some companies where trillions of dong were allegedly appropriated in 2018 and 2019, the public security ministry said in a statement on its website. Van Thinh Phat didn’t respond to requests for comment.
Lan and her conglomerate were said to be major stakeholders in SCB, the local news website Tri Thuc Tre reported in 2014. The bank did not immediately respond to questions, but it said in a statement that “Ms. Truong My Lan does not participate in the management and administration of SCB.”
The investigation into the real estate conglomerate follows a string of other anti-corruption cases this year, ranging from examining stock price manipulation to rounding up high-level government officials tied to bribery accusations involving pandemic repatriation flights.
Officials most likely anticipated the latest detentions would roil some bank customers and markets, said Fred Burke, senior advisor at the law firm Baker McKenzie.
“They probably took into account there would be a shock,” he said. “The government would not make a move if it thought it would destabilize the financial system. It’s doing this because it thinks it will enhance the integrity of the system and clear out some cobwebs.”
It’s part of an overall push by the government to enhance the nation’s macroeconomic prospects, including stricter rules for corporate bond issuers and investors, he said.
Bank stocks were all down in the morning session, leading with Vietnam Technological & Commercial JCB, which fell by the daily limit of 7% to the lowest level since November 2020. The benchmark VN Index dropped as much as 4.2%, making it the worst performer in Asia today. The gauge has fallen more than 33% so far this year.
“Investors are now wondering what other banks may be involved with Van Thinh Phat,” said Phung Trung Kien, founder of asset management firm Vietnam Holdings Inc.
— With assistance by Mai Ngoc Chau and Nguyen Kieu Giang
(Updates the story with market price in the 13th paragraph.)