Prime Minister requests State Bank to study recommendations on applying Basel III

One of the requirements in Directive 09 is to require the State Bank to study and implement recommendations from banks related to the application of Basel III standards.

Prime Minister Pham Minh Chinh has just signed and issued Directive No. 09 on tasks and solutions of state-owned enterprises (SOEs) to contribute to double-digit economic growth and rapid and sustainable national development.

In particular, the Prime Minister requested the State Bank of Vietnam (SBV) to study and implement the recommendations of relevant banks to apply Basel III standards and a controlled testing mechanism (sand box) with the spirit of creating space for creativity and evaluating effectiveness.

At the same time, the State Bank must also direct credit institutions to continue to reduce costs, increase the application of information technology, simplify administrative procedures, review and restructure the organizational apparatus, and be willing to share part of the profits to strive to reduce lending interest rates in the spirit of "harmonized benefits and shared risks".

In addition, review and classify subjects to reduce procedures and lending conditions to push credit capital faster, more promptly, and more effectively, especially for projects and fields that create momentum for growth, digital transformation, and green growth; while ensuring the safety and rationality of banking operations.

In addition, it is necessary to continue researching and implementing preferential credit packages to promote economic growth drivers, develop social housing and create favorable conditions for young people under 35 years old to buy social housing.

Regarding the application of Basel III standards, the Ministry of Planning and Investment (now the Ministry of Finance) previously sought comments on the Draft Resolution of the National Assembly on the establishment of a regional and international financial center in Vietnam (financial center).

In particular, the Draft proposes a roadmap for applying international standards and practices on banking (such as Basel III) to start implementation in financial centers from January 1, 2026 and allowing transactions using crypto assets and cryptocurrencies in financial centers to be implemented from July 1, 2026.

In response to this proposal, the State Bank of Vietnam responded that there is no practical basis for applying Basel III international standards in financial centers from January 1, 2026.

The SBV explained that foreign ownership ratios and foreign investment conditions in financial centers must comply with Vietnam's trade and investment protection commitments. The draft resolution's provision that foreign ownership ratios in financial centers are not subject to restrictions should be carefully considered to avoid violating Vietnam's international obligations, including trade and investment protection agreements.

One of the requirements in Directive 09 is to require the State Bank to study and implement recommendations from banks related to the application of Basel III standards.

The SBV also emphasized that the roadmap for applying international standards such as Basel III needs to be developed synchronously and in line with the roadmap applied to commercial banks and branches of foreign banks in the country. Therefore, applying Basel III from January 1, 2026 as stated in the draft resolution is not feasible.

In case of immediate application, the State Bank of Vietnam proposes to only apply Basel III to foreign investors when joining the financial center and consider this a condition for granting an establishment license.

In November 2024, the State Bank of Vietnam also proposed adjusting the minimum capital adequacy ratio of banks to update new regulations in Basel III Standards and to suit the specific operations of Vietnamese banks.

Regarding the capital safety ratio, the State Bank of Vietnam proposed to regulate the minimum capital safety ratio at 10.5%, in which the minimum Tier 1 capital is 6%, the core Tier 1 capital is 4.5%, the total of Tier 1 capital and Tier 2 capital is 8%, and the capital preservation buffer is 2.5%. Specific ratios include: The minimum Core Tier 1 capital ratio is 4.5%; The minimum Tier 1 capital ratio is 6%. Regarding the minimum capital safety ratio, the draft proposes two options of 8% and the levels of response in each phase gradually increasing according to the roadmap to 2033 to reach 10.5%.

In Vietnam, the banking system is moving towards applying Basel III standards, aiming to improve capital quality and liquidity. This helps create a foundation for a stable banking system, capable of recovering from crises, while minimizing systemic risks.

Currently, many commercial banks and foreign bank branches in Vietnam have consulted and applied Basel III regulations in risk management and operations.

Source: https://baodaknong.vn/thu-tuong-yeu-cau-nhnn-nghien-cuu-kien-nghi-ve-ap-dung-basel-iii-246908.html