Banks will soon complete the international standards of Basel III
VIETNAM, September 5 –
HÀ NỘI — Although there are currently no regulations requiring the application of Basel III international banking standards, some banks have been the pioneers in implementing the standards and are expected to complete the work soon.
Orient Commercial Joint Stock Bank (OCB) recently said it is focused on implementing the higher international standards of Basel III and expects to complete it by the end of this year. Previously, OCB was one of the banks that completed the application of Basel II standards on capital adequacy according to Circular 41/2016/TT-NHNN of the State Bank of Việt Nam (SBV) in December 2018 , just after Việt Nam International Commercial Joint Stock Bank (VIB) and Commercial Joint Stock Bank for Foreign Trade of Việt Nam (Vietcombank).
In May 2022, the Southeast Asia Commercial Joint Stock Bank (SeABank) also announced the results of applying Basel III standards to the bank’s operations as well as risk management.
Previously, some banks started implementing Basel III immediately after they finalized Basel II. For example, the Tiên Phong Commercial Joint Stock Bank (TPBank) announced that it had met all Basel III requirements by the end of 2021.
In February 2022, Nam Á Commercial Joint Stock Bank (NamABank) also announced that it would implement and enforce Basel III risk management requirements. This decision was taken after the bank was recognized as compliant with all Basel II standards.
VIB and Maritime Commercial Joint Stock Bank (MSB) have completed the application of Basel III in liquidity management, operational risk management and market risk management.
At the same time, HCM City Development Commercial Joint Stock Bank (HDBank) applied two liquidity ratios, including Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR) of Basel III standards.
Compliance with Basel standards is very important for banks in the current environment where the SBV will prioritize a higher credit growth quota for banks with ample capital, capital adequacy ratio (CAR) high and sound risk management through the application of Basel II, Basel III and International Financial Reporting Standards 9 (IFRS 9).
In addition, the application of Basel III also helps banks to improve their credit rating and strengthen their competitiveness in the international market.
Basel III is the third Basel Accord, a framework that sets international standards for bank capital adequacy, stress testing and liquidity requirements. Complementing and replacing parts of the Basel II standards, it was developed in response to shortcomings in financial regulation exposed by the 2007-08 financial crisis. It aims to strengthen banks’ capital requirements by increasing minimum capital requirements, holdings of high-quality liquid assets and reducing banks’ indebtedness.
Basel III was published by the Basel Committee on Banking Supervision in November 2010 and was to be introduced from 2013 to 2015; however, the implementation was extended several times until January 1, 2022, and then again until January 1, 2023, as a result of the COVID-19 pandemic. —VNS