The Asia Commercial Bank (ACB) has become the seventh bank in Vietnam to meet Basel II standards, the second edition of the Basel Accords.
Late last week, the bank was officially given approval from the State Bank of Vietnam (SBV) to apply Basel II standards, raising the number of Vietnamese banks meeting the global norms ahead of the SBV’s schedule to seven.
According to SBV, all of ACB’s activities have started to follow Circular 41/2016-TT/NNNN regulating the application of Basel II standards since this month.
Basel II is the 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, aims to enhance competition and transparency in the banking system and make banks more resistant to market changes.
So far, SBV has approved seven of more than 30 local banks to apply Basel II standards, which are are Vietcombank, VIB, OCB, MBBank, TPBank, VPBank and ACB. Vietnam News reported.
With the application of Basel II ahead of the SBV’s deadline, the banks will be prioritized by the SBV in getting higher credit growth limits this year. According to current regulations, the SBV sets a credit growth limit for the entire year for each bank to ensure the credit growth target of the entire banking system during the year and all local banks expect to have high credit growth limit as their income still mainly depends on lending.
Dang Khac Vy, Chairman of Vietnam International Bank (VIB) said at the 2019 annual general meeting of shareholders that, VIB expected the SBV to approve its credit growth limit proposal of 35 per cent in 2019 as it was one of the first banks to meet the central bank’s Basel II standards.
MBBank and TPBank also set high credit growth targets of 20 per cent for this year and are waiting for approval from the central bank. As for MBBank, industry insiders forecast the bank could then ask for another extension to increase its credit growth limit to 30 per cent this year.
Meanwhile, credit growth targets set at other banks, which haven’t met Basel II standards, are lower. Techcombank, for example, wants credit growth of 13 per cent while the figure for Kien Long Bank is 15 per cent.