Hanoi, Vietnam, August 18, 2016—IFC,
a member of the World Bank Group, supports the adoption of international
risk-management practices in Vietnam to strengthen the banking sector.
Industry executives attended a half-day workshop to discuss how best to
implement the Internal Capital Adequacy Assessment Process (ICAAP), a key
component of central bank regulations worldwide. Supported by the Government
of Switzerland’s State Secretariat for Economic Affairs (SECO), the event
was co-organized by IFC, the Swiss Finance Institute (SFI) and Vietnam
Banks’ Association (VNBA).
By undertaking an ICAAP, banks are more equipped to assess the level of
capital needed to support current and future risks, including a buffer
for stress scenarios. Well-run banks view it as a core strategic activity
that safeguards operations
including in times of stress, rather than as a compliance exercise.
“The need for improving risk management and integrating it with business
and capital planning through an ICAAP process has become much more important,”
said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Lao PDR.
“Demonstrating credible capital buffers to absorb material risks, beyond
regulatory minimum requirements, can generate positive impact on a bank’s
operations and resilience, contributing to sustainable growth of both the
Vietnam’s banking sector and the entire economy.”
ICAAP is central to the Basel II framework, which are international banking
guidelines that require financial institutions to have sufficient capital
to support the risks incurred in banking operations. The State Bank of
Vietnam has initiated a timeline for the adoption of Basel II to promote
a more resilient banking sector and further use of international standards
in Vietnam. The pilot program began earlier this year and has been implemented
by 10 local commercial banks.
“Applying Basel II capital adequacy guidelines is essential for commercial
banks in Vietnam to upgrade banking operation standards,” said Nguyen
Toan Thang, General Secretary of VNBA. “This workshop will help bankers
enhance their understanding of ICAAP by showing how it is used within a
bank’s strategy and risk management framework. It will also encourage
banks to develop and use better risk management techniques to monitor and
manage their risks by exploring practical experience, good practices, challenges
and lessons learned in establishing ICAAP and integrated risk management.”
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with 2,000 businesses worldwide, we use our six decades of experience to
create opportunity where it’s needed most. In FY16, our long-term investments
in developing countries rose to nearly $19 billion, leveraging our capital,
expertise and influence to help the private sector end extreme poverty
and boost shared prosperity. For more information, visit www.ifc.org.
About Swiss Finance Institute (SFI)
SFI, a private Swiss foundation, supports and advances research, and
executive education in banking and finance around the world including a
large SECO-funded Bank Directors Training Program for Vietnamese bankers
in collaboration with the SBV. For more information, visit www.sfi.ch.
About Vietnam Banks’ Association (VNBA)
VNBA - is a voluntary professional organization of credit institutions
in Vietnam; it operates in a voluntary principle of autonomy and self-responsibility;
it gathers and motivates its members to cooperate and support one another
in their operations; it protects legitimate rights and interests of the
members; it acts as a link between the Members and the government agencies;
it aims at stable,
effective, prudential, and healthy development of the credit institutions
of Vietnam and contributes to the implementation of the monetary policies
for socioeconomic development. VNBA currently has 49 members, including
33 commercial banks, 8 finance companies and 8 other types of organizations.
For more information, visit www.vnba.org.vn.