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The State Bank of Vietnam (SBV) is seeking broad public feedback on a draft circular that would replace Circular 22/2019/TT-NHNN, which sets safety limits and ratios for the operations of banks and foreign bank branches. The proposal is intended to update how the banking system’s financial safety indicators are determined.
Some commercial banks have recommended reviewing the timetable in Circular 22/2019/TT-NHNN (as amended by Circular 26/2022/TT-NHNN). One proposal is to continue counting a portion of State Treasury deposits toward funding rather than removing them entirely.
A notable change in the draft is the shift from the indicator “loan-to-deposit ratio” (LDR) to “credit outstanding relative to funding” (CDR). Under the draft, the indicator is defined based on total credit outstanding and total mobilized funds in line with existing regulations, rather than being limited to loans and deposits.
The calculation components largely retain current provisions. These include corporate bond investments and off-balance-sheet commitments on the credit side, and funding sources beyond deposits on the mobilization side.
For State Treasury deposits, the draft would adjust the calculation compared with the current schedule under Circular 22/2019/TT-NHNN (as amended by Circular 26/2022/TT-NHNN). Under the current circular, the share of State Treasury term deposits included in mobilization declines over time and is scheduled to be eliminated by 2026.
In contrast, the draft would redefine the treatment by excluding non-term deposits from mobilization and counting 80% of the State Treasury’s term deposits.
For the “credit extension” concept, the draft defines total credit exposure to include:
The draft also maintains the objective of keeping the credit-to-mobilization ratio at a maximum of 85%.
Beyond the changes above, the proposal adds Basel III–style indicators that are not defined in the current framework, including the leverage ratio (LEV), the liquidity coverage ratio (LCR), and the net stable funding ratio (NSFR).
SBV states that Basel has established a non-risk-based leverage ratio to be applied alongside risk-based capital requirements under Basel III. The purpose is to curb excessive leverage in the banking system, serving as a supplementary tool to risk-based capital requirements to help ensure bank safety.
SBV notes that some countries already apply this ratio, including the European Central Bank, Malaysia, Singapore, Hong Kong, Taiwan, and the United States.
Article 14 of the draft sets out the implementation schedule. From January 1, 2028, banks and foreign bank branches will be required to fully implement both the LCR and NSFR.
In the period before that date, institutions will continue to comply with existing requirements under Circular 22/2019/TT-NHNN, including solvency requirements and limits on using short-term funds for medium- and long-term lending.
The draft also provides an early adoption mechanism. After the circular takes effect, banks may apply to the SBV to adopt the LCR and NSFR ratios if they meet the minimum 100% requirement for both ratios.
Early adoption must be supported by an independent auditor’s confirmation and management’s attestation of full compliance with the requirements, with no adverse opinions at the most recent audit.
Under Article 15, the draft sets rules on liquidity risk management. Banks must develop and implement a liquidity risk management framework aligned with internal control requirements, ensuring full coverage of risk identification, measurement, monitoring, and control.
The regulation distinguishes between institutions that continue to operate under Circular 22 and those that move to the new framework. The first group will manage liquidity under existing rules, while the second group must comply with the LCR and NSFR requirements under the draft.
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