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

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

Pursuant to Article 9 of Circular 08/2022/TT-NHNN (effective from September 1, 2022) stipulating contents of micro-prudential supervision of credit institutions and foreign bank branches:

1. A micro-prudential supervision unit shall determine scope and contents of information related to the operation of a micro-prudential supervised entity for supervision of compliance with laws on the operational safety of banks, other regulations of monetary and banking laws in the operation of the micro-prudential supervised entity, which focuses on one or some or all of the following contents:

a) Provide supervision of compliance with statistical reporting regimes, information reporting regimes under regulations of the Law on Credit Institutions (revised version) and guidance documents related in its competence and responsibilities of the micro-prudential supervision unit;

b) Provide supervision of compliance with limits and prudential ratios in the operation of credit institutions prescribed in Articles 126, 127, 128, 129 and 130 of the Law on Credit Institutions (revised version; classify debts, extract risk reserve funds of credit institutions and foreign bank branches on the basis of results from the remote supervisory system and electronic statistical reporting system of the State Bank of Vietnam;

c) Provide supervision of compliance with the satisfaction of conditions and standards applied to managers and operators prescribed in Article 50 and clause 4 Article 89 of the Law on Credit Institutions (revised version); and compliance with administrative mechanisms of the supervised entity as prescribed in Chapter III of the Law on Credit Institutions (revised version);

d) Provide supervision of compliance with regulations of laws on transfer of capital contributions, loans, deposits and investment of credit institutions to their subsidiary companies, affiliated companies and branches abroad;

dd) Review internal regulations promulgated by the micro-prudential supervised entity according to regulations in Article 93 of the Law on Credit Institutions (revised version): Annually, the micro-prudential supervision unit shall choose certain internal regulations for reviewing.

2. The micro-prudential supervision unit shall carry out the supervision of compliance with directions and requests of state competent authorities applicable to the micro-prudential supervised entity (if any).

3. The micro-prudential supervision unit shall carry out risk supervision via the use of modules and methods of risk analysis promulgated by the Governor of the State Bank of Vietnam in each period and/or carry out analysis and consideration of risks of banking supervised entities via one or some or all of the following contents:

a) Analyze and consider key changes and unusual fluctuations via the use of change thresholds in items including assets, liabilities, equities, revenues and accrued interests, costs, business results, limits and prudential ratios on the basis of results from the State Bank's electronic statistical reporting system, the remote supervisory system. Chief Inspectors and bank supervisors shall decide change thresholds of the above-mentioned items.

b) Consider key impact on management and operation of the micro-prudential supervised entity by assessing the following contents:

(i) changes in managers and executives as prescribed in Article 50 and Article 89 of the Law on Credit Institutions (revised version) of the micro-prudential supervised entity;

(ii) Changes in the situation of shareholders, share ownership of managers, executives, major shareholders and related persons of these individuals and organizations (including investment in the form of capital contribution or share purchase with the aim of holding control over a credit institution being a joint-stock company);

(iii) Changes in the situation of capital contribution, limited partners and owners of credit institutions being limited liability companies or credit institutions being cooperatives.

c) On the basis of receiving adverse information that is possible to cause key impact on the micro-prudential supervised entity, the micro-prudential supervision unit shall assess and consider the risk situation of the micro-prudential supervised entity;

d) Supervise the situation of credit extension and credit quality for fields, customers and transactions with high risks in the operation of the micro-prudential supervised entity for analysis and assessment of levels of key impact on the operation of the micro-prudential supervised entity.

The micro-prudential supervision unit shall determine fields, customers and transactions with high risks in each period.

4. For joint-stock commercial banks, when necessary, the micro-prudential supervision unit shall review and assess the compliance with laws, credit quality and risks of high-value transactions (including credit extensions, investments, capital contributions, share purchases, other receivables). The micro-prudential supervision unit shall consider and decide specific high-value degrees of the above-mentioned transactions.

5. The micro-prudential supervision unit shall decide or appeal to the competent authority to decide other supervision contents applicable to the micro-prudential supervised entity within its assigned supervision suitable for needs and sources of the unit.

What are regulations on contents of macro-prudential supervision of a branch of a credit institution in Vietnam? 

In Article 10 of Circular 08/2022/TT-NHNN (effective from September 1, 2022), contents of macro-prudential supervision of a branch of a credit institution are specified as follows:

1. Supervision of compliance includes:

a) Supervision of compliance with regulations of laws on:

(i) Statistical reporting regime of the branch as prescribed in statistical reporting regimes;

(ii) Other regulations of monetary and banking laws applicable to the branch.

b) The micro-prudential supervision unit shall carry out the supervision of compliance with directions and requests of state competent authorities applicable to the micro-prudential supervised entity (if any).

2. Supervision of risks in the following contents:

a) Items of assets, liabilities, revenues, costs and differential revenues and costs;

b) Situation of credit extensive and credit quality of the micro-prudential supervised entity. When necessary, the micro-prudential supervision unit shall review and assess the credit extensive and other high-value receivables of the micro-prudential supervised entity. Director of a branch of the State Bank of Vietnam shall decide specific high-value degrees of these transactions;

c) Preparation and update of the list of personnel information, including at least the branch director of the credit institution;

d) Information causing negative impact on the operation of the supervised entity.

3. For large-scale transaction offices in a particular area decided by the branch Director of the State Bank or transaction offices having information causing negative impact on the operation of such transaction offices, the micro-prudential supervision unit shall carry out the supervision as prescribed in clauses 1 and 2 of this Article via branches that managing such transactions.

Best Regards!