Criteria for selecting commercial banks for temporarily idle state funds of Vietnam

03:19, 10/07/2024

This is the highlighted content mentioned in Circular 64/2019/TT-BTC issued by the Minister of Finance guiding certain provisions in Decree 24/2016/ND-CP regulating policies for state fund management in Vietnam.

The criteria for evaluation; the scoring methods of each criterion; methods for the total evaluation score calculation, and the selection of commercial banks (CBs) proposed for the temporarily idle state funds (state funds) with a fixed term deposit by the State Treasury of Vietnam, are specifically stipulated in Circular 64/2019/TT-BTC as follows:

- The evaluation criteria used to assess and select CBs proposed for the temporarily idle state funds fixed term deposit include:

+ Total asset size;

+ Total equity;

+ Credit quality (bad debt ratio compared to total credit balance);

+ Business performance (post-tax profit ratio compared to average equity).

- Scoring method of each criterion: the score of each evaluation criterion is the criteria score multiplied by the weight of that criterion; in which:

+ The score of each criterion is determined as follows:

STT	Criterion	Score
1	Total asset size
1.1	From 1,000,000 billion VND and above	100
1.2	From 800,000 billion VND to below 1,000,000 billion VND	90
1.3	From 600,000 billion VND to below 800,000 billion VND	80
1.4	From 400,000 billion VND to below 600,000 billion VND	70
1.5	From 200,000 billion VND to below 400,000 billion VND	50
1.6	Below 200,000 billion VND	0
2	Total equity
2.1	From 50,000 billion VND and above	100
2.2	From 45,000 billion VND to below 50,000 billion VND	90
2.3	From 40,000 billion VND to below 45,000 billion VND	80
2.4	From 35,000 billion VND to below 40,000 billion VND	70
2.5	From 30,000 billion VND to below 35,000 billion VND	50
2.6	Below 30,000 billion VND	0
3	Credit quality (bad debt ratio compared to total credit balance)
3.1	Below 1%	100
3.2	From 1% to below 1.5%	90
3.3	From 1.5% to below 2%	80
3.4	From 2% to below 2.5%	70
3.5	From 2.5% to below 3%	50
3.6	From 3% and above	0
4	Business performance (post-tax profit ratio compared to average equity)
4.1	From 20% and above	100
4.2	From 15% to below 20%	90
4.3	From 10% to below 15%	80
4.4	From 5% to below 10%	70
4.5	From 2% to below 5%	50
4.6	Below 2%	0

+ The weight of each criterion is determined based on the importance of each criterion for the safety of the fixed term deposit by State Treasury of Vietnam. To be specific:

STT	Evaluation Criteria	Weight (%)
1	Total asset size	55
2	Total equity	25
3	Credit quality (bad debt ratio compared to total credit balance)	10
4	Business performance (post-tax profit ratio compared to average equity)	10

- The total evaluation score calculation: the total evaluation score of the CB is determined based on the total score of each evaluation criterion.

- CBs scoring a total evaluation score of 90 points or higher are selected for the list of CBs proposed for the temporarily idle state funds fixed term deposit.

- Data used to evaluate the CBs is the separate annual financial statements of the previous year of CBs, which have been audited by the State Audit Office of Vietnam or an independent auditing organization legally operating in Vietnam.

- If necessary, the General Director of State Treasury of Vietnam will submit to the Ministry of Finance for a decision on adjustments to evaluation criteria; score calculation methods, and selection of CBs to suit the actual situation.

See more regulations in Circular 64/2019/TT-BTC effective from November 1, 2019.

Thu Ba

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