Amendment to the Method of Provision Calculation for International Securities Investment Activities

04:44, 11/07/2024

This is one of the prominent contents in Circular 37/2018/TT-NHNN amending and supplementing Circular 39/2013/TT-NHNN regulating the determination, establishment, management, and utilization of risk provisions by the State Bank of Vietnam.

According to the new regulations, for securities currently being invested in the international financial market that have depreciated compared to their book value, the determination of the provisioning rate is calculated as follows:

Specific provision for securities		Book value of security item i	-	Market value of security item i

Where:

- The book value of the security item is determined according to the regulation in the Accounting System of the State Bank of Vietnam and the guiding documents.- The market value of the security item is taken from Bloomberg or Reuters or other reliable sources and calculated according to the following formula:

Market value of the security item	=	Purchase quantity	x	Closing price of that security item	+	Accrued interest up to the time of provisioning for risks	x	Exchange rate converted to Vietnamese Dong at the time of provisioning for risks

- If the time of provisioning for risks falls on a holiday, the closing price taken will be the closing price of the preceding working day.

More details can be found in Circular 37/2018/TT-NHNN effective from February 15, 2019.

- Thanh Lam -

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