The fifth-largest bank was "dragged into the water" by a wealthy woman! The country's central bank bailed out 170 billion yuan, an amount equivalent to one-quarter of its foreign exchange reserves

Vietnam's central bank struck.

Vietnam's central bank is bailing out Saigon Commercial Bank on an "unprecedented scale", according to the Securities Times, citing Reuters, Vietnam's fifth-largest bank was involved in the country's largest financial fraud, followed by a run and a collapse of Vietnam's stock market.

On April 15, Vietnam's VN index fell 4% during the day.

According to the report, a bank document shows that as of early April, Vietnam's central bank has injected 23.72 billion US dollars (equivalent to about 170 billion yuan) of "special loans" into Saigon Commercial Bank, which is equivalent to 5.6% of Vietnam's annual GDP and a quarter of its foreign exchange reserves.

Last week, after a month-long trial, the Ho Chi Minh City People's Court in Vietnam sentenced Zhang My Lan, the former chairman of Vietnam's Van Thinh Phat Group (VTP) and Vietnam's richest woman, to death in the first instance. According to the Ho Chi Minh City People's Court, Truong My Lan was sentenced to death for embezzlement, 20 years in prison for offering bribes, and 20 years in prison for violating regulations on bank operations. The punishment for several crimes shall be combined and the death penalty shall be imposed.

In October 2022, real estate tycoon Truong My Lan, the richest Chinese woman in Vietnam, was suddenly arrested and interrogated by the police on suspicion of illegally issuing bonds between 2018 and 2019, raising trillions of VND.

Trao has a strong influence in Vietnam's real estate industry, and she founded VTP Group, the largest private real estate company in Vietnam. Since VTP Group is not listed, Zhang Meilan's specific net worth is unknown, but Vietnamese insiders generally call her "the richest Chinese woman in Vietnam", a fourth-generation Chinese in Vietnam, whose ancestral home is Shantou, Guangdong Province. It is reported that Zhang Meilan actually controls more than 90 percent of the shares of Saigon Commercial Bank through hundreds of shell companies and agents.

The news of Truong My Lan's arrest immediately caused an uproar in Vietnam's business circles, and the "special scrutiny" of the Saigon Commercial Bank, Vietnam's fifth-largest bank, was also subjected to a "special scrutiny", which led to a frenzied run on the Saigon Commercial Bank, as well as a crisis in Vietnam's real estate and corporate bond markets, and the country's stock market fell sharply.

170 billion yuan! Vietnam's central bank made a move

According to the Securities Times, the largest financial fraud case in Vietnam's history has not yet ended its impact on the country's financial system. On April 17, Beijing time, Reuters reported that if the loan was not provided, Saigon Commercial Bank would fail. But if lending continues, Vietnam's treasury will gradually dry up.

Vietnam's central bank is reportedly carrying out an "unprecedented" bailout of Saigon Commercial Bank (SCB), which was caught in the country's largest financial fraud. The reason for describing the operation as "unprecedented" is the sheer scale of the capital injection, the complexity of the operation, and the extent of the damage that the case has caused and is likely to cause to Vietnam's financial system.

As of April 2, Vietnam's central bank had injected $23.72 billion in "special loans" into the SCB, according to a bank document that has been updated daily since March 29 with data on the bank's overall capital injections. Vietnam's central bank initially injected an average of US$3.7 billion per month into the bank in October and November 2022, before slowing to about US$1.2 billion per month by October 2023, the documents show. Since November last year, the pace of capital injections has slowed further, with about $910 million injected per month.

Vietnam's public debt remained at around 37% of GDP last year, and the budget deficit widened slightly to 4.4% of GDP, according to the central bank. Foreign exchange reserves at the end of the year were about $100 billion. Vietnam's central bank has never publicly disclosed the size of its injection into the SCB before. It is now reported that the total amount of funds provided by the central bank to the SCB is equivalent to 5.6% of Vietnam's annual GDP and a quarter of its foreign exchange reserves.

Even with such a large-scale bailout, Saigon Commercial Bank's business situation has not improved. As of the end of December, the bank's deposits fell 80 percent to about $6 billion, according to the filing. At this rate, the bank's deposits will be completely depleted by the middle of this year. Meanwhile, as of October last year, non-performing loans had soared to 97.08 percent of the bank's credit balance.

Despite official support, Saigon Commercial Bank was facing liquidity problems as of December last year, with it sometimes struggling to settle payments on time and process payments through the country's main clearing system when its customers transferred money to other banks, according to the latest news. The bank said this affected the "psychology" of customers and created risks for the banking and financial system as a whole.

The richest woman in Vietnam, sentenced to death

On April 11, a judge of the Ho Chi Minh City People's Court in Vietnam announced that he had sentenced Truong My Lan, a Vietnamese real estate developer and the richest woman, to death.

Zhang Meilan, 67, was accused of defrauding US$12.5 billion (about 90.5 billion yuan). In the verdict, the judge found Zhang Meilan guilty of embezzlement of public funds, accepting bribes, and violating bank regulations, causing particularly heavy economic losses. In addition, the judge also demanded that Truong Mei Lan pay 673.8 trillion VND (about 195 billion yuan) in compensation.

According to Red Star News, before the verdict was announced, a family member of Zhang Meilan claimed that Zhang Meilan would appeal regardless of the verdict. Under the law, she has 15 days to file an appeal. It has been reported that the death penalty in Vietnam has been mainly for drug-related or murder suspects, rather than corruption suspects, in a "rare sentence". A total of about 2,700 people were summoned to testify, with prosecutors from 10 districts and more than 200 lawyers involved, the report said.

The evidence related to the case adds up to 104 boxes with a total weight of 6 tons. It is reported that Zhang Meilan was tried with 85 other defendants, all of whom were found guilty, of which four were sentenced to life imprisonment, and the rest were sentenced to different sentences, ranging from 3 to 20 years. Among them, Zhang Meilan's husband Zhu Liji was sentenced to nine years in prison, and Zhang Meilan's niece Zhang Huiyun was sentenced to 17 years in prison.

According to the indictment filed by Vietnam's Supreme People's Procuratorate, Truong My Lan used bribery and other illegal means to obtain 85 to 91.5 percent of the shares of Saigon Commercial Bank, causing losses of about 498 trillion VND (about 19.9 billion U.S. dollars) to the bank.

Prosecutors allege that over a three-year period from February 2019, Truong My Lan ordered her driver to withdraw a total of VND108 trillion from the bank and deposit it directly in the basement of her mansion. It has been reported that such a huge amount of cash, even if all of them are Vietnam's largest denomination banknotes, weigh as much as two tons.

Li Honghe, director of the Vietnam Studies Program at the Yusof Issa Institute of Southeast Asian Studies, a Singapore-based think tank, said it was no secret that Ms. Chang and her VTP Group used Saigon Commercial Bank as their "money bag": "She has been taking money through Saigon Commercial Bank and then buying properties on a large scale in prime locations." ”

According to reports, Truong My Lan was born in 1956 and sold cosmetics with her mother in the old market in Ho Chi Minh City when she was young. In 1992, she met her husband, investor Zhu Liji, and the two later gave birth to two daughters: Zhu Yuehuai, born in 1994, and Zhu Yuepan, born in 1995.

In 1992, Zhang Meilan and her family founded VTP Fat. At that time, Vietnam was in a period of economic transformation, and VTP grew into one of the strongest real estate companies in Vietnam within a few years, and participated in the construction of several landmark buildings in the center of Ho Chi Minh City, such as the 39-storey Saigon Times Square and the five-star Windsor Plaza Hotel.

According to reports, by the time of Ms. Zhang's arrest, VTP Group had become a business empire with more than 1,000 companies and hundreds of legal representatives. Its more than 1,000 enterprises can be divided into four categories: financial institutions represented by Saigon Commercial Bank, companies engaged in business activities in Vietnam (mainly real estate, restaurants and hotels), "ghost" companies whose main task is to help the group borrow money from banks, and companies responsible for managing the funds and assets of the Truong My Lan family overseas.

In VTP Group, there are a total of 4 shareholders. Among them, Zhang Meilan holds 60% of the shares, Zhu Yuehuai holds 10% of the shares, Zhu Yuepan holds 10% of the shares, and Emerald Company represented by Zhang Huiyun holds 20% of the shares.

It is worth noting that Zhu Yuehuai has also made great achievements in the catering industry, and was recommended as "one of the most powerful women" by the Fortune website in 2016, and was also called "a rookie in the catering industry" by the media.

Source: National Business Daily, Securities Times, Red Star News