The Vietnamese government has launched an unprecedented bailout for the Saigon Joint Stock Commercial Bank (SCB) embroiled in lending in the country's biggest financial fraud.
According to new information, SCB will collapse completely if it is not given loans and the Treasury Revenue of Vietnam will gradually dry up.
The information is a very surprising news because the large amount of cash injection, the complexity of the operation and the scale of the existing damage are capable of destroying Vietnam's financial system.
Meanwhile, Vietnam's public debt stabilized last year at 37% of Gross Domestic Product (GDP) while the budget deficit widened slightly to 4.4%.
Based on the independent monitor ASEAN+3 Macroeconomics and Research Office, foreign reserves were around $100 billion at the end of the year and they increased from about $90 billion at the end of October.
The National Bank of Vietnam has reportedly injected cash into the bank amounting to 5.6% of the country's annual economic output and a quarter of its foreign exchange reserves.
For now, the central bank has been monitoring SCB to prevent any bank theft following the arrest of real estate tycoon, Truong My Lan in October 2022.
SCB has used the injection to cover cash withdrawals as per bank documents sent to the central bank in November.
Lan, the tycoon who was arrested in October 2022 for instigating a bank fraud operation and was sentenced to death after he was found guilty.
He pleaded not guilty to embezzlement and corruption for allegedly siphoning $12.5 billion in loans from SCB to his company while controlling the bank through proxies.
The central bank and the government are seeking help from the private sector, especially foreign investors, to neutralize the stability of SCB despite the 30% restriction on the combined foreign ownership of Vietnamese banks.
