10:38 | 11/06/2019 Finance - Banking
(VEN) - The State Bank of Vietnam (SBV) has selected 10 commercial banks to pilot Basel II standards by 2020.
Among them are Vietcombank, Vietinbank, BIDV, MB, Sacombank, Techcombank, ACB, VIB, VPBank, and Maritime Bank. According to Circular 41/2016/TT-NHNN regulating the capital adequacy ratio (CAR) for operations of banks and/or foreign bank branches, all banks must comply with Basel II standards by January 1, 2020. To date, many commercial banks have been given approval from the SBV to apply Basel II standards.
In addition to the 10 selected ones, other banks have also made efforts to apply Basel II standards in order to improve their business activities.
Basel II is the second edition of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on banking supervision. Basel II comprises minimum capital requirements, supervisory review and market discipline, aiming to enhance competition and transparency in the banking system and make banks more resistant to market changes. Under Basel II, the CAR at banks must reach a minimum of eight percent.
In late 2018, Vietcombank and VIB were the first two Vietnamese banks to graduate from the Basel II pilot program. From early May, additional banks have gained SBV approval to apply Basel II standards.
According to MB, the bank has identified the risk management platform as one of the most important platforms and has implemented many solutions to improve risk management capacity, with a focus on the application of Basel II standards.
TPBank General Director Nguyen Hung said that to gain SBV approval to apply Basel II standards, the bank had conducted research and participated in the contents and training programs organized by the SBV and professional consultancy organizations for three years.
Basel II is one of the top priorities at VPBank. Instead of hiring external consultancy companies, VPBank has built a team of 58 full-time staff to implement the program. Over the past four years, the bank has conducted 82 sub-projects related to Basel II, held 28 training courses and deployed 15 risk measurement models.
Meeting the CAR has been a challenge for many banks when implementing Basel II. VPBank said its CAR in recent years has been higher than the stipulated level of eight percent under the Basel II requirements. In addition, VPBank said it has achieved positive business results when implementing Basel II.
SBV Governor Le Minh Hung said the application of Basel II standards ahead of schedule reflects the banking
sector’s efforts in recent years to meet international standards in Vietnam. The SBV will always support banks to help
the banking system operate safely and efficiently adhere to international standards.