Monday , January 30 2023

Saigon Commercial Bank tries to stem deposit run with highest 12-month rate


The Saigon Joint Stock Commercial Bank (SCB) has increased its interest rate for 12-month term deposits by 1 percentage point to 8.55%, the highest in Vietnam’s banking system.

After many depositors rushed to withdraw their term deposits before maturity, SCB has also raised the interest rates for other deposits with terms of over nine months by 1 percentage point. The new rates have been applied starting Oct. 8.

Over the past month, local banks have raced against one another to increase their deposit interest rates, but most have fixed their rates at below 8% for term deposits of 12 months or less.

From Oct. 7 afternoon to Oct. 8, worried about their deposits’ safety, many people queued up at SCB branches to withdraw their money.

The panic was sparked over suspicions of the bank’s ties with real estate tycoon Truong My Lan, after she was arrested on suspicion of financial fraud. The sudden death of an SCB board member Nguyen Tien Thanh, also chairman and CEO of Tan Viet Securities Joint Stock Company, at the age of 50 also contributed to the panic.

Lan, chairwoman of property developer Van Thinh Phat Group, was arrested for alleged fraud related to issuance and trading of bonds worth trillions of dong (VND1 trillion = $41.87 million). SCB said she does not hold managerial or executive positions at the bank.

SCB will ensure liquidity in all situations, Deputy CEO Hoang Minh Hoan said Saturday.

The central bank also urged people not to panic and withdraw money before term deposits mature and lose their benefits, saying it would always ensure their money’s safety.

SCB, amalgamated by three banks, began official operations in January 2012. It is the biggest private bank by assets.

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