What are contents of macro-prudential supervision of a system of credit institutions and foreign bank branches in Vietnam?

What are contents of macro-prudential supervision of a system of credit institutions and foreign bank branches in Vietnam?

Pursuant to Article 15 of Circular 08/2022/TT-NHNN (Effective from September 1, 2022) regulating contents of macro-prudential supervision of a system of credit institutions and foreign bank branches:

The macro-prudential supervision unit shall carry out risk supervision via one or some or all of the following contents:

1. Analysis and consideration of financial soundness indicators for the purpose of detecting risks threatening the safety system shall be classified as follows:

a) Analysis and consideration of equity, capital adequacy ratios, capital mobilization and use;

b) Analysis and consideration of the liquidity;

c) Analysis and consideration of bad debts and asset quality;

d) Analysis and consideration of interbank activities;

dd) Analysis and consideration of business results; accrued interests.

The macro-prudential supervised entity shall use change thresholds suitable for characteristics of the macro-prudential supervised entity for assessing risks threatening the safety system. Chief Inspectors and bank supervisors shall decide change thresholds of the above-mentioned items.

2. Analysis and consideration of macro-economic developments, impacts of other fields in the economy are likely to threaten the stability of the system of credit institutions and foreign bank branches.

3. An annual or ad hoc endurance test at the request of the Governor of the State Bank, including the following contents:

a) Take the endurance test on credit risks via analysis and forecast of the bad debt developments according to macro-economic scenarios, impact of suppositions about transferring debt groups and suppositions about big customers insolvent;

b) Take the endurance test on market risks via analysis of impact according to volatility scenarios of exchange rates and interest rates on the safety and soundness indicators of the system, group of credit institutions, foreign bank branches;

c) Take the endurance test on interbank contagion risks;

d) Take the endurance test on liquidity risks via analysis of the liquidity in case of bank run.

4. When necessary or at the request of the Governor of the State Bank of Vietnam, the macro-prudential supervision unit shall analyze and consider the potential for causing a systemic banking crisis and response measures.

5. For the group of systematically important credit institutions and foreign bank branches, the macro-prudential supervision unit shall supervise at least the contents prescribed in clause 1 of this Article and take the 6-month or ad hoc endurance test upon arising consideration for systemic risks at the request of the Governor of the State Bank of Vietnam.

The macro-prudential supervision unit shall, based on criteria on scale, inter-linkage and interchangeability, make a list of systematically important credit institutions and foreign bank branches and appeal to the Governor of the State Bank of Vietnam to promulgate before March 31 every year.

6. For the group of the people's credit funds and micro-financial organizations, the macro-prudential supervision unit shall at least follow contents prescribed in clause 1 of this Article.

7. The macro-prudential supervision unit shall decide or appeal to the competent authority to decide other supervision contents suitable for needs and sources of the unit.

What are contents of macro-prudential supervision of a system of credit institutions and foreign bank branches in Vietnam? (Image from the Internet)

What are regulations on preparation of reports on the micro-prudential supervision and proposal and imposition of sanctions for macro-prudential supervision in Vietnam?

In Clause 1, Article 16, Circular 08/2022/TT-NHNN (Effective from September 1, 2022) stipulates preparation of reports on the micro-prudential supervision and proposal and imposition of sanctions for macro-prudential supervision is defined as follows:

1. On the basis of results of the risk supervision as prescribed in Section 2 of this Chapter and based on regulations of current laws, the macro-prudential supervision unit shall:

a) make an ad hoc or periodic report on the macro-prudential supervision as prescribed in clauses 2 and 3 of this Article according to Appendix IV issued together with this Circular;

b) request the micro-prudential supervision unit to research and consider the imposition of sanctions prescribed in Chapter V of this Circular for the banking supervised entity (if necessary).

Best regards!