Vietnam's Property and Bond Troubles

How a real estate boom financed by corporate bonds ended in a crisis in 2022-23, including the Van Thinh Phat fraud case, and what it shows about financial risks.

Rapid growth brought financial risks.

The boom

Vietnam’s property developers borrowed heavily, including through corporate bonds sold to retail investors.
Bond issuance surged in 2020-21.

The crackdown

In 2022, authorities arrested executives of property firms over bond fraud, shaking confidence. Bond markets froze, and many developers struggled to repay.

Van Thinh Phat

Property tycoon Trương Mỹ Lan, chair of Van Thinh Phat, was accused of illegally controlling Saigon Commercial Bank and siphoning billions of dollars.
In 2024, she was sentenced to death for embezzlement in one of the world’s largest bank fraud cases; the losses were estimated at over 12 billion dollars.
Depositors rushed to withdraw money from SCB in 2022.

Lessons

Weak oversight of banks and bond sales.
Connected lending between banks and owners’ businesses.
Retail investors exposed to risky bonds.

Response

New rules tightened bond issuance and bank ownership.

The bond buyer

A retired teacher buys a high-yield property bond sold at a bank branch, believing it safe. When the developer defaults, she struggles to recover her money.

Thinking fast growth rules out financial crises

Weak regulation let risky lending and fraud build up.

Key takeaways

Property developers borrowed heavily through bonds.
A 2022 crackdown froze the bond market.
The Van Thinh Phat case involved losses of over 12 billion dollars.
Weak oversight and connected lending were key failures.