A confirmed “grey rhino” is charging toward the Vietnamese market.

The General Inspectorate of the Vietnamese government released an investigative report last Friday, substantiating serious risks within the financial system—multiple major banks and property firms have severely violated regulations during bond issuance. This announcement sparked a significant reaction in the capital markets, with the Vietnamese stock market plunging by 5.6% on Monday, marking the largest single-day drop in six months.

According to local media, the report covers bond issuance from January 2015 to June 2023 and details numerous violations by issuers, including banks and real estate companies, encompassing fund misappropriation, violations of information disclosure regulations, and overdue principal and interest payments.

As the second-largest listed real estate firm in Vietnam, Novaland faced allegations of issuing 15 trillion Vietnamese dong in corporate bonds to funnel funds through complex processes to its affiliated company, Nova Homes, with some registered capital found to be non-existent. Inspections revealed that Novaland Group and three of its subsidiaries engaged in violations during bond issuance.

Among the 20 bond-issuing entities related to Novaland, nearly 169 trillion Vietnamese dong in bonds remained unpaid by mid-2023, with several companies, such as GreenWich and BNP Global, facing overdue payments and raising concerns regarding repayment capabilities.

Furthermore, reviews of five major commercial banks uncovered that military banks and Asia Commercial Bank had diverted tens of trillions of Vietnamese dong raised from bond sales for short-term loans instead of the planned medium- and long-term credit or investments, thus violating fund utilization and disclosure regulations.

Under the pressure of the VNI index's sharp decline, Vingroup, Vinhomes, and Vietnam Foreign Trade Bank became the stocks experiencing the largest declines. Investor sentiment worsened after the announcement of the inspection results, coupled with Novaland Group's announcement of its inability to fulfill convertible bond payment obligations, triggering panic selling in the market.

Novaland, as the focal point of the investigation, had two cases involving bond issuance violations transferred to the Ministry of Public Security for further inquiry.

Novaland is listed on the Ho Chi Minh City Stock Exchange (HOSE) and is part of the VN30 index, representing the 30 largest listed companies by market capitalization in Vietnam. As of 2025, it holds about 8% market share and ranks third in the real estate sector, trailing only Vingroup and Dat Xanh Group.

Data from the first half of 2025 indicates that the top five real estate companies in Vietnam hold 60% of the market share. Novaland, being one of the leading companies, possesses significant competitiveness in the high-end residential and large-scale project sectors.

Investigations revealed that Novaland Group had previously issued 15 trillion Vietnamese dong in corporate bonds to bolster capital for its subsidiary, Khai Hung Real Estate Co. Khai Hung subsequently used these funds to acquire 99.9% stake in The Ky Hoang Kim Real Estate Company, owned by Vo Thi Kim Khoa, valued at 18.43 trillion Vietnamese dong.

However, upon examining the cash flow of multiple banks, inspectors found that Khoa’s capital in The Ky Hoang Kim Real Estate Company essentially did not exist, as most of the funds were transferred out the same day they were received.

Moreover, after Novaland Group transferred the 15 trillion Vietnamese dong bond proceeds to Khai Hung, those funds circulated “through multiple intermediaries” ultimately being utilized by Nova Homes Trading Joint Stock Company.

Inspectors concluded that Novaland Group and its three subsidiary companies—Unity, Aqua, and Lucky House—violated regulations during corporate bond issuance. After receiving the revenue from bond issuance, individuals transferred approximately 70.84 trillion Vietnamese dong to Nova Homes Trading Joint Stock Company.

Inspectors stated that, despite being unable to verify each intermediary transaction, Novaland Group and its three subsidiaries used similar methods to leverage bond-raising funds. These entities seemingly coordinated funding contributions from individuals and legal entities in registered capital, utilizing bond income to acquire equity and transfer funds to Nova Homes Trading Joint Stock Company.

Marco Martinelli, a partner at Turicum Investment Management, remarked that investor sentiment quickly “deteriorated” following the disclosure of the inspection results.

He noted that Novaland Investment Group's announcement of its inability to fulfill payment obligations for its convertible bonds further escalated market pressures:

“The fragility of the market lies in the fact that the strong rebounds seen in recent months encouraged retail investors to increase leverage. Once negative news broke, the market was easily subjected to forced liquidations, ultimately leading to widespread panic across sectors.”

Debt Crisis Deepens: Related Companies in Financial Turmoil

In addition to Novaland itself, the inspection report also flagged several associated companies for severe violations and debt issues.

Among the 20 bond-issuing entities linked to Novaland, nearly 169 trillion Vietnamese dong in bonds remain unpaid as of June 30, 2023. Four issuers have overdue principal and interest payments, while two others have delayed interest payments, resulting in total debts reaching 45.55 trillion Vietnamese dong.

Specifically, four associated companies were cited for violations:

GreenWich: After issuing bonds and utilizing 20 trillion Vietnamese dong in proceeds, by the end of June 2023, the company had overdue principal exceeding 15.7 trillion Vietnamese dong and interest over 241 billion Vietnamese dong. Inspectors believe the company may be incapable of repaying principal and interest.

BNP Global: Following the issuance of 21 trillion Vietnamese dong in bonds, default occurred; although part of the debt has been repaid, as of April 12, 2024, 12.16 trillion Vietnamese dong in principal remains overdue.

Cat Lien Hoa Real Estate Development: Also found to have delayed payment of principal and interest following the issuance of 9.86 trillion Vietnamese dong in bonds.

Residence Investment and Development: Through the issuance of 30 trillion Vietnamese dong in bonds, paid a “deposit” to Nova Homes Trading Joint Stock Company for purchasing vacation villas. Inspectors noted that this “deposit agreement” essentially represents a way for Nova Homes to long-term occupy bond funds.

Three Banks: Misappropriation of Tens of Trillions of Vietnamese Dong

The inspection has not only uncovered issues within real estate companies but also revealed regulatory loopholes within the bank system regarding bond issuance and fund management.

The report examined five major commercial banks, including Military Commercial Bank (MB), Asia Commercial Bank (ACB), VPBank, Vietnam International Bank (VIB), and Orient Commercial Bank (OCB), which collectively issued over 255 trillion Vietnamese dong (approximately 9.7 billion USD) in private corporate bonds during the inspection period. By mid-2023, 173 bond codes, valued at nearly 98 trillion Vietnamese dong, remained outstanding.

Inspectors found that among the five banks, three misused the funds raised from bond issuances. ACB raised 37 trillion Vietnamese dong in two bond issuances in 2018 but subsequently allocated nearly 24 trillion Vietnamese dong for short-term loans, contrary to its publicly announced plan for fund allocation towards medium- and long-term credit needs.

Military Bank redirected funds from 11 bond codes issued in 2022 worth 19.2 trillion Vietnamese dong towards loan activities, instead of planned investment activities. The report highlighted these banks' failure to adequately track and manage raised funds, with all bond revenues being merged into general business capital and then disbursed to borrowers.

The General Inspectorate also discovered that several banks, including VIB and MB, failed to comply with information disclosure requirements. They did not clearly outline a timetable for fund utilization before issuance, while ACB and MB violated deadlines for the release of certain bond-related information.

Some banks failed to compile annual capital plans for bond issuance between 2016 and 2019, leading to their data systems' inability to accurately distinguish between bond funds and other loan sources.