Vietnam: When shall the credit conversion factor (CCF) equaling 100% be applied in banks?

14:44, 06/03/2017

This is a featured content specified in Circular No. 41/2016/TT-NHNN of the State Bank of Vietnam prescribing prudential ratios for operations of banks and/or foreign bank branches.

According to Circular No. 41/2016/TT-NHNN of the State Bank of Vietnam, the credit conversion factor (CCF) equaling 100% shall be applied to:

- Loan-equivalent off-balance sheet commitments (e.g. the irrevocable lending commitment defined as the lending commitment that cannot be waived or changed under any form with respect to established commitments, unless otherwise prescribed by laws; guarantees or standby letters of credit securing debt obligations or bonds; undisbursed irrevocable lines of credit, etc.);

- Payment acceptances (e.g. endorsements of documents against acceptance, etc.);

- Payment obligations of banks and/or foreign bank branches arising from selling securities for which they are entitled to make a claim due to the issuer's default on commitments;

- Forward contracts regarding assets, deposits and securities partially paid in advance on which banks and/or foreign bank branches make commitments;

- Off-balance sheet commitments which have not been prescribed in Clause 1, 2, 3, Point a, b, c and d Clause 4 Article 10 of Circular No. 41/2016/TT-NHNN.

View other CFFs at Circular No. 41/2016/TT-NHNN of the State Bank of Vietnam, effective from January 01, 2020.

- Thanh Lam -

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