Circular 14, replacing Circular 41, allows banks to implement Basel III standards early if they meet the State Bank of Vietnam's requirements. This raises banks' capital adequacy ratio from 8% to 10.5% over four years, adding requirements for common equity tier 1 (CET1) and tier 1 capital. For the first time, the IRB approach is permitted, enabling banks to measure risk for individual institutions.

VPBank headquarters in Hanoi. Photo: VPBank

VPBank headquarters in Hanoi. Photo: VPBank

The IRB approach requires banks to develop models to estimate key risk parameters such as probability of default (PD), loss given default (LGD), and exposure at default (EAD). This necessitates extensive data systems, advanced information technology, and highly qualified personnel.

To meet these requirements, VPBank has established a governance and monitoring framework with regulations and procedures. They have also developed a database of businesses and individuals with credit relationships over at least 5-7 years. Their modern cloud-based IT system also meets the stringent requirements of the internal credit rating system.

According to a bank representative, adopting the IRB approach not only fulfills regulatory requirements but also supports VPBank's long-term strategic goals in risk management, monitoring, and proactive risk control. This minimizes losses and enhances resilience to economic fluctuations.

As one of the first joint-stock commercial banks in Vietnam, VPBank has maintained steady growth for over three decades. It is now a leading bank in total assets, operating efficiency, and profitability, with a strong presence in retail, small and medium-sized enterprises (SME) segments. VPBank is also a pioneer in digital transformation to provide optimal financial products and services.

As of 30/6, VPBank's total consolidated assets reached over 1.1 quadrillion VND. The bank is among the leaders in capital with total equity exceeding 152,000 trillion VND. This allows VPBank to further strengthen its foundation for sustainable long-term development.

Since 2015, VPBank has implemented Basel II standards, investing in technology and specialized personnel. In 2019, the State Bank of Vietnam approved the bank's early compliance with Circular 41. VPBank has affirmed its leading risk management position with prestigious international awards from The Asian Banker, Asia Risk, Celent, and Energy Risk. The bank was also among the top 5 Vietnamese companies with the highest ASEAN Corporate Governance Scorecard (ACGS) in 2024.

VPBank aims to become one of the three largest banks in Vietnam and among the top 100 banks in Asia. The bank is committed to enhancing risk management capabilities in line with international standards. Applying for the IRB approach demonstrates VPBank's long-term vision since early 2021.

(Source: VPBank)

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