The central bank has allowed ACB to apply Basel II from this month (Photo: ACB)
 
Hanoi (VNS/VNA) - The Asia Commercial Bank (ACB) late last week 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 the SBV’s decision, 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 second edition of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on banking supervision. Basel II, which 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.

The SBV has so far approved only seven local banks to apply Basel II standards earlier than its deadline of 2020. They are Vietcombank, VIB, OCB, MBBank, TPBank, VPBank and ACB.

With the application of Basel II ahead of the SBV’s deadline, the banks will be prioritised 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.

At last month’s 2019 annual general meeting of shareholders, Chairman of VIB Dang Khac Vy said VIB expected the SBV to approve its credit growth limit proposal of 35 percent in 2019 as it was one of the banks to meet the central bank’s Basel II standards.

MB and TPBank also set high credit growth targets of 20 percent 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 percent this year.

Meanwhile, credit growth targets set at other banks, which have not met Basel II standards, are lower. Techcombank, for example, wants credit growth of 13 percent while the figure for Kien Long Bank is 15 percent.-VNS/VNA