The State Bank of Vietnam (SBV) has allowed the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) to apply Basel II standards one year earlier than the deadline initially set by the central bank.
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. It aims to enhance competition and transparency in the banking system and make banks more resistant to market changes.
In order to realize the target of being the best risk management bank, Vietcombank’s Board of Directors has since 2014 directed a project to analyze the difference between the Basel II requirements and the status of Vietcombank. On this basis, it offers the Basel II Implementation Roadmap with a total of 82 initiatives to meet Basel II standards by the end of 2018 and meet the advanced approach in 2019.
The extensive Basel II program has the participation of more than 160 people from the bank’s headquarters and branches. The implementation of 82 initiatives under the roadmap has helped Vietcombank qualify to meet Basel II standards. At the same time, Vietcombank has basically fulfilled the important conditions for the application of Basel II according to the advanced method.
Vietcombank has further improved its governance culture and risk management system, adjusting business strategy to ensure the balance between business development and risk control in the direction of diversifying products, focusing on retail development and expanding non-credit activities.
The result is a strong demonstration of Vietcombank’s commitment to becoming one of the 100 largest banks in Asia and one of the world’s 300 largest financial banking groups.
At the same time, SBV also announced its approval for the Vietnam International Bank (VIB) to apply Basel II standards.
Three years ago, the SBV selected 10 commercial banks to pilot Basel II standards and set the deadline of 2020 for the banks to meet the standards. It was part of the central bank’s plan to restructure the domestic credit institution system, as risk management gaps remain a major reason for increasing bad debts.
The selected banks were Vietcombank, Vietinbank and BIDV, along with MB and Sacombank, Techcombank, ACB, VPBank, VIB and Maritime Bank.