On 13th December 2019, Fulbright School of Public Policy and Management hosted the high-level roundtable on implementing Basel II standards in Vietnam banking system with the participation of representatives from State bank of Vietnam, members of the Board of Directors, Deputy General Directors, Directors of Risk management in 21 domestic and international banks in Vietnam such as Vietcombank, ACB, Vietinbank, BIDV, AB Bank, ACB, Shinhan, Standard Chartered, etc. and financial consulting firms and KPMG.
2019 is a significant year with many commercial banks being recognized by SBV as meeting Basel II standards and is also a preparatory year before Circular 41/2016/TT-NHNN takes effect on early 2020. In the foreseeable future, banks meeting (pursuant to Circular 41) as well as those working towards Basel standards are under pressure to comply with government's rules. This poses great challenges for stakeholders including policy makers, finance and banking regulators, bank leaders, etc.
Since 2017, Fulbright School of Public Policy and Management (FSPPM), Fulbright University Vietnam, in partnership with Global Economic Governance (GEG), Oxford University conducted the research project on adopting and implementing global standards in banking regulation in emerging economies. Findings of this research are cited in the book "The Political Economy of Bank Regulation in Developing Countries" in a chapter covering Vietnam situation, which is to be published in early 2020 by Oxford University Press.
Main purposes of the rountable were to share the research's findings, update multi-dimensional analysis from practitioners and prepare for subsequent phases in Basel standards adoption.
As one of the first banks successfully implementing Circular 41 on capital adequacy prior to the effective date of the Circular, Ms. Dinh Thi Thai, CEO cum Deputy Chief Risk Officers, Vietcombank, reflected on the 6 year journey of bank to achieve Basel II standards. Ms. Thai believed the commitment of the bank's top leaders and inter-agency cooperation drive the success of Basel II project in a record duration at VCB.
Mr. Le Trung Kien, Deputy Director, Department of Bank Operation Safety Policies, emphasized regulators (SBV in this case) do not copy Basel II in absolute terms but adjust and modify the criteria to suit Vietnam macro economics and financial market conditions. Mr. Kien encouraged commercial banks to change their perspectives towards Basel adoption as an value-added activity rather than simply complying to the legal requirement.
This event was funded by DFID and ESRC under the DFID-ESRC Growth Research Programme (DEGRP), which focuses on research on inclusive economic growth in low-income countries. DEGRP research covers four key areas: financial sector development and growth; agriculture and growth; innovation and growth; and China's engagement in sub-Saharan African countries. For more information, please visit: https://degrp.odi.org/.