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The Vietnamese banking sector is entering a new phase of development in which transparency, governance, and risk management are placed at the center of bank operations. Rather than growing primarily by scale, banks are shifting toward growth anchored in governance and quality.
For years, international standards such as Basel, IFRS, and OECD were often treated mainly as compliance concepts rather than being integrated into governance and internal decision-making systems. According to Truong Nhat Quang, managing partner at YKVN, recent major cases show that governance can directly affect system liquidity, the cost of capital, and market confidence.
In the integration context, banks are required to transform governance to align with international norms as a foundation for operating safely and transparently, while fulfilling their core function: protecting deposits and maintaining customer trust.
In practice, banks that operate in line with international governance standards tend to control risks more effectively and identify and price them more clearly. This can reduce the risk premium demanded by the market, improving access to capital and financing conditions.
A key change is the integration of risk governance from the outset of processes rather than addressing risk at the end. For example, IFRS 9 requires recognizing expected credit losses when a loan is formed, while Basel III requires capital to reflect the degree of asset risk. These requirements change not only procedures but also how banks make decisions.
International governance standards are translated into control mechanisms, including independent supervisory roles by the board of directors and increased participation of independent members with appropriate expertise. Supervisory decisions should be made objectively and in the long-term interests of the organization, rather than reflecting the interests of any shareholder group or individual.
The model also emphasizes a separation between business functions and risk control functions, supported by the “three lines of defense.” Under this approach, the business line is responsible for risk management, the risk management and compliance line provides independent oversight, and internal audit provides objective evaluation of the entire system.
Within this framework, business decisions are not only based on growth targets; they are also framed within the risk appetite approved by the board, helping ensure growth remains within safe and disciplined boundaries across the operating system.
International standards also stress that effective governance cannot rely solely on structure or control processes; it must be supported by a healthy organizational culture. Building a strong risk culture—emphasizing integrity, transparency, and professional responsibility—is described as essential for governance principles to work in practice.
In banking, where depositor trust is central, culture influences both decision-making and long-term stability. Depositor protection and market trust are presented as core functions of banks, rooted in risk governance, capital discipline, and effective controls.
EY Vietnam’s Deputy General Director Ngo Quynh Thanh said market confidence has become a key driver and that governance is no longer only about compliance, but the foundation for stability and sustainable development of credit institutions. She also noted that, following Basel Committee on Banking Supervision principles, the core objective of bank governance is to safeguard stakeholders and uphold public interest within sustainable development, with retail banks prioritizing depositor interests.
Transparency in governance is described as a foundation for financial performance. By helping identify and price risks more clearly, transparency can reduce risk premiums demanded by international financial institutions. As a result, banks may access funds at lower costs, with higher credit lines and longer maturities.
Beyond funding costs, maintaining governance discipline and transparent information can improve access to capital markets and enhance bank valuation. A McKinsey survey found that investors are willing to pay 20–25% higher valuations for well-governed companies in Asia.
With Vietnam being upgraded to an emerging market, transparency and governance standards are expected to become key conditions for banks to participate more deeply in international capital flows. Both passive and active funds require accountability and consistency in governance when allocating capital.
Operationally, good governance can help banks make faster decisions within clear discipline. When risk appetite, data, and control systems are established, decisions are less dependent on personal experience and more based on systemic data and information.
This advantage is described as something that cannot be built in the short term; it accumulates over time through organizational discipline, data quality, and consistency in governance.
Overall, an internationally standardized governance framework is presented as improving operational capability while supporting banks’ core function: safe operation, protecting depositors’ assets, and maintaining market trust over the long term. As governance becomes more central to stability and sustainable growth, markets are expected to increasingly focus on the substantive quality of governance frameworks in financial institutions.
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