Bankruptcy, people lose all their money?

Can a bank go bankrupt?

Under the Law on Credit Institutions 2010, Vietnam allows banks and credit institutions to request the court to declare bankruptcy. A bank can be considered bankrupt when it falls into a state of insolvency, unable to fulfill its financial obligations to customers.

In fact, no bank in Vietnam has ever gone bankrupt. When a commercial bank is operating poorly, the State Bank will restructure it and buy it at 0 VND.

Did the depositors lose all their assets?

According to Article 6 of the Law on Deposit Insurance 2012, banks receiving deposits from individuals must participate in deposit insurance, except for policy banks.

Deposit insurance is a guarantee to repay deposits to insured depositors within the insurance payment limit when the deposit insurance participating organization becomes unable to repay deposits to depositors or goes bankrupt.

According to Decision 32/2021/QD-TTg on insurance payment limits, the maximum insurance amount paid for all insured deposits (both principal and interest) of a person at the bank when the obligation to pay insurance arises is 125 million VND.

Thus, if the bank goes bankrupt, depositors will receive a maximum of 125 million VND (deposit insurance money).

In addition, depositors can also receive compensation from the liquidation of assets of the bankrupt bank.

However, according to the Bankruptcy Law, the remaining assets of a bankrupt bank are paid in priority order: bankruptcy costs, unpaid wages, severance pay, social insurance, health insurance, employees, other benefits under the labor contract as well as the signed collective labor agreement; then bank deposits.