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Vietnamese developer Sun Group proposes 15 years of SCB revival

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Sun Group vows at least $120 million to reorganize banks

Hanoi, March 18 (Reuters) – Banks in Vietnam’s largest financial fraud center have received bailout from the central bank, accounting for 5% of the country’s economic output in 2024, with local white knights hoping to repay for 15 years in 15 years, according to documents reported by Reuters.

Nearly $26 billion has poured into Saigon Stock Commercial Bank (SCB) since operating in 2022, arrested by a real estate tycoon who effectively controls the SCB, highlighting Vietnam’s efforts to oversee its banks and include potential sector risks.

Southeast Asian countries are scrambling at home, and their export-driven economies are at risk of a global trade war, with President Donald Trump imposing tariffs on U.S. trading partners.

The SCB is still “totally dependent on the special loans of the National Bank of Vietnam” to pay the deposit withdrawal, and in the first year of the restructuring, the central bank will reach $657 trillion ($25.8 billion).

Under Sun Group ownership, lenders will start repaying the central bank in the 14th year of the rescue plan, but under the basic circumstances of the 222-page plan, leveraging market conditions, but have not been reported before.

In this case, the SCB will fully repay the central bank within 15 years of the restructuring approval, which Sun Group hopes to obtain earlier next month.

Reuters cannot determine whether the plan for Sun Group on February 17 has been supported by the Vietnamese government and the ruling Communist Party, or whether it will be approved based on the developer’s schedule.

Sun Group, SCB, Central Bank and the Ministry of Finance did not respond to email and phone requests for comment.

Sediments plummeted, losses soared

The scandal broke down in October 2022 for the arrest of businesswoman Truong My Lan, who established a real estate empire, which prosecutors said was funded by $44 billion in SCB loans for a decade.

Lan used agents to control one of Vietnam’s largest commercial banks, causing panic among depositors, prompting the central bank to inject $4 billion into the central bank within three weeks of the arrest and billions in three weeks after the arrest to prevent the bank from collapse.

State media reported that the court upheld the LAN’s death penalty in December, denied her appeal for her conviction of corruption and bribery.

Sun Group reports that when the bank is operating, the already terrible state of SCB will only deteriorate and require a proposed multi-year restructuring.

The document shows that at the end of last year, the deposit plummeted to $19.2 trillion from 669 trillion directors starting in October 2022.

Vietnam requires banks with subsidiaries like SCB to own 9% of risk-weighted assets worth 9% to buffer potential losses. The Sun Group filing said the SCB’s capital adequacy ratio was 100% before the bank was running, down to 176% by the end of 2024 because of the heavy losses, and said new audit data had not been reported yet.

Among documents produced by Vietnamese police in the trial for LAN, the latest figures from SCB Charter Capital disclosures were in 2017, when investigators found its capital adequacy of 4.2%. That year, the bank reported a positive ratio of about 10%, and its auditor Deloitte made no warnings in its annual report.

Deloitte did not respond to a request for comment.

According to an internal SCB document reviewed by Reuters, the central bank had 652.7 trillion yuan ($25.6 billion) as of February 18, the central bank had 652.7 trillion yuan ($25.6 billion) as of February 18, which provided the latest news on daily cash injections.

Sun Group’s plan is designed to make SCB profit again, citing the developer’s banking experience since 2021 has been a major shareholder in Vietnam’s smaller Vietnam lender National Citizen Commercial Equity Bank.

It proposes to invest at least 3 trillion Dong ($120 million) in SCB’s Charter Capital – the funds that the owner injects into the core capital buffer.

The document predicts that SCB generates revenue from resources, including in government bonds and infrastructure projects funded by resources recovered from loans.

The roadmap shows that it will be borrowed by selling recoverable assets, land rights and half of the loans used as collateral for SCB loans, with the rest from profits from new investments.

But the recoverable assets are only a small part of the bank’s books, as much of the SCB’s expansion is to object to Shell, a LAN-owned company that has collateral for inflation, said Sun Group’s plan. (Reports by Francesco Guarascio; other reports by Phuong Nguyen; Edits by Sumeet Chatterjee and William Mallard)