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Sacombank faces intense scrutiny as a government audit exposes substantial loans tied to a single project and an array of potential regulatory violations, sparking concerns over the bank's internal control systems.
As per recent audit findings released by the Vietnamese government, the Saigon Thuong Tin Commercial Joint-Stock Bank (Sacombank) has landed itself in troubled waters.
The audit, focused on the bank's historical transactions, showed a reduction in outstanding credit balance, from $640.5 million as of December 2017 to $634.1 million by August 2018.
Alarmingly, nine corporations had accessed loans that accounted for a staggering 48.5 per cent of the bank's equity, amounting to $385.9 million.
The beneficiaries, including prominent corporations such as Him Lam Thu Do JSC and Hong Bang Investment JSC, utilised these funds to invest in the Saigon Binh An Urban Area project.
However, the audit has highlighted numerous irregularities within the credit files of these businesses, triggering concerns about Sacombank's regulatory oversight. The bank failed to exert stringent controls on these clients, who simultaneously sourced loans from Sacombank and other institutions to finance their contracts tied to the aforementioned project.
Furthermore, the audit underscored potential risks tied to the collateral underpinning these loans. The entirety of the asset rights and benefits derived from the Saigon Binh An Urban Area project were used as collateral. Yet, at the time, the project did not possess comprehensive legal documentation pertaining to ownership rights, raising concerns about the legality of such security.
Sacombank's considerable loans, despite the weak or missing credit files, had been green lit without adequate assessment.
In addition to these problematic real estate loans, the audit recommended probing Sacombank's handling of bad debt sold to the Vietnam Asset Management Company (VAMC). The bank had failed to retain the original collateral files, which constitutes a violation.
In another major lapse, Sacombank reportedly auctioned off collateral without obtaining the necessary client authorisation, in clear breach of legal regulations.
Consequently, the auditing body has recommended an in-depth examination of the roles and responsibilities of Sacombank's leadership, alongside those of the Ho Chi Minh City Banking Inspection and Supervision Agency.
The investigation comes as Sacombank neglected to set up additional provisions worth $100.2 million for 77 debts before offloading them to the VAMC, further highlighting the bank's potential shortcomings in terms of risk management and internal control mechanisms.
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By Lam Tien
