Effective managment of credit risk will bring many benefits to banks such as: Reduce costs, improve income, preserve capital for commercial banks; create trust for depositors and investors; create a premise to expand the market and increase the prestige, position, image and market share for banks.
Recently, risk management capacity of banks in Vietnam has changed drastically and positively thanks to step-by-step meeting the requirements of international integration. The legal framework for safety standards of credit institutions has been improved, closer to international banking practices and standards, creating a foundation for credit institutions to operate more safely and promote restructuring according to the goals and orientations set out. Vietnamese commercial banks gradually carry out and apply Basel II capital safety standards according to the roadmap.
For example, at Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank), on 11 March 2019, the bank officially launched the credit creation, approval and management system (LOS) after more than a year of serious construction. Through the implementation of LOS, Sacombank will manage and standardise all records of customers, standardise all data, increase safety and security features, and enhance risk management capacity, following Basel II standards.
In addition, the reports and forms will be automatically exported and circulated through each level of approval by the system, helping to minimise the risk of approval. Document delivery will be automated towards the goal of paperless.
In addition, by linking other systems of Sacombank, LOS allows users to look up customer transaction history information (loan levels, outstanding balances, loan sales and payment deposit transactions) easily and quickly, the information is thoroughly entered from the beginning as a reuse platform many times, thereby helping the processing of documents at the stage of judgment implementation and in the reviewers browse next time more quickly.
From the preeminent features on the management levels at the head office/ area/ branch/ transaction office, LOS will be used as a tool to support monitoring and remote risk management better for Credit records such as: understanding the situation of credit transactions of each customer/ customer group, the status of processing documents, the status of implementation, using the limits… for timely direction and adjustment.
According to Phan Dinh Tuedeputy general director of Sacombank: “The implementation process of LOS is divided into four sequential stages at key branches and it is expected that on 1 April 2019, Sacombank will deploy LOS all over the system and application of this system as a tool to effectively manage the process of granting credit, help reduce risks as well as save time for the units involved in this activity. ”
Tue also added that during the implementation process, Sacombank always had a team of LOS project who had been well trained as well as received knowledge from consulting partners, would be present at the branches, transaction offices to directly support, answer questions in the process of working with LOS system to limit mistakes in the first time of operation.
Previously, on February 19, 2019, Sacombank and PwC Vietnam Consulting Co., Ltd also officially started the project “Upgrading and perfecting the Asset Liability Management (ALM) framework. “. The project is expected to be completed by the end of quarter 3/2019 with the goal of building and perfecting the management framework of liquidity risk, interest rate risk in the bank book comprehensively in accordance with Basel requirements as well as SBV regulation.
With the investment in credit creation, approval and management system (LOS) and the project of upgrading and improving the ALM framework, the goal of frame construction for Sacombank credit operation management in accordance with Basel II standards, SBV regulation and in line with international practices that are coming into effect. This has been and will help Sacombank’s activities to ensure the direction of efficiency, safety and sustainability.
