In the morning of December 19th 2019, Vietnam International Commercial Joint Stock Bank (VIB) held a ceremony to announce the completion of three pillars of Basel II.
Thus, the bank is the first bank in the system to meet all three pillars of Basel II, before big names like Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank).
According to the VIB’s introduction, the bank’s pillar one and three of Basel II were completed in October 2018, the time the State Bank of Vietnam (SBV) approved it to carry out Basel II from January 1st 2019, one year ahead of plan.
VIB’s Risk Management director Ha Hoang Dung said that from 2018, VIB has successfully implemented Basel II’s pillar one and three under the standard method, ensuring the capital adequacy ratio (CAR) calculated automatically according to the provisions of Circular 41/2-16 with CAR always being above nine percent. The bank has fully met the requirements of information infrastructure, risk management policy system, database, human resources, and capital planning to ensure that the bank manages and calculates the CAR as prescribed. On November 28th 2018, VIB and Vietcombank were the first two banks to received approval of the SBV to apply Circular 41 one year earlier.
In 2019, VIB continued to carry out the main contents of Basel II’s pillar two, assessing the Internal Capital Adequacy and Assessment Process (ICAAP). To carry out ICAAP, VIB has cooperated with PwC consulting firm to learn experience and approach the ICAAP calculation method deployed in similar scale banks in South East Asia, thereby developing a process and method of internal assessment on the level of capital adequacy suitable for the bank.
As of September 30th 2019, VIB has completed the entire internal assessment process for the capital adequacy and ensures the compliance with pillar 2 from January 1st 2020 one year earlier than the SBV’s requirement in Circular 13/2018.
According to VIB’s general director Han Ngoc Vu, VIB’s clear roadmap on meeting Basel II standards before the deadline required by the SBV shows that the bank does not only aim to comply with the regulations. The difference is that the bank has always considered completing all three pillars of Basel II standards as one of the important tasks in its long-term vision of risk management.
VIB’s leader also said that the bank expects to continue investing in developing Basel II under the advanced method and aims to apply Basel III standards in its risk management. The actual implementation shows that Basel II has really brought many practical benefits to the bank, helping it make appropriate adjustments in terms of strategy, helping it manage capital plans in line with sustainable growth goals and improving the quality of business operations comprehensively.
International organisations have also positively evaluated VIB’s completion and early application of all three pillars of Basel II, contributing the improving VIB’s reputation in particular and the banking industry of Vietnam in general, particuarlly in the process in which Vietnam is making efforts to become a member of the International Settlement Bank (BIS).
Speaking at the event, Tran Dang Phu, the SBV’s deputy Chief of Supervision Department said that the SBV highly appreciates the results that VIB’s achieved and believes that the completion of all pillars of Basel II is an important foundation for the bank’s operation to be more efficient, safer, at the same time contributing to promoting the determination of Vietnamese banks in implementing Basel II and complying with Circular 41 and Circular 13 of the SBV.
