OCB to become first in Vietnam to successfully apply Basel II

Addressing the application of new banking regulations, OCB’s representative said, “The successful implementation of Basel II shall help us optimise the profits with well-tailored business strategies based on risk management, the appropriate allocation of capital to customers and products, and the establishment of portfolio or credit with maximum profitability.”

Regarding customers’ benefits from the regulatory alteration, the bank’s representative also added, “Once OCB exercises the Basel II, our customers shall gain access to credit level terms compatible with the customer risk categorisation (CRC). Basel II would request the bank to provide more detailed information, like which credit level terms to employ. As a result, customers are more likely to achieve lower interest rates and curb the risks incurred.”

Particularly, collecting data from over 40,000 customers involved in transactions like credit, letters of credit (LC), and bills of lading (BL) at 117 OCB transaction locations for six months posed numerous challenges to the bank, especially when the bank’s operations in the same period was a major hurdle itself.

OCB and customers stand to see great benefits from applying Basel II

The bank’s representative further highlighted the benefits of Basel II in spite of the demanding implementation process prior to November, “Basel II not only helped us enhance the liquidity ratio, downsize the risks, and utilise capital sources, but also significantly eliminated economic turmoil-related damages. By becoming the eleventh financial institution in Vietnam to apply Basel II, OCB is one step closer to aligning itself with the latest international banking regulatory standards due to Basel II’s strict terms of risk management framework (RMF), legal frameworks, database management, and capital adequacy ratio (CAR).”

Previously in early 2017, State Bank of Vietnam (SBV) issued Directive No.01/CT-NHNN on implementing monetary policies and ensuring safe and effective banking operations which provided guidelines for ten banks named in February 2016 to apply Basel II standards. The list of banks selected by SBV to pioneer Basel II included BIDV, VietinBank, Vietcombank, VPBank, MB, Techcombank, Sacombank, Maritime Bank, ACB, and VIB.

Basel II is a set of international banking regulations that are based on three main pillars, minimal capital requirements, regulatory supervision, and market discipline which takes into account the credit rating of assets in identifying risk weights, provides a framework to handle various types of risks and strengthens disclosure requirements.

OCB is a Vietnam-based financial institution listed in the top ten commercial banks with the largest profit margin and one of the top six banks with the lowest ratio of non-performing loans (NPL).

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