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The State Bank of Vietnam (SBV) has announced a broad consultation on a draft Circular intended to replace Circular 22/2019/TT-NHNN, which sets safety limits and ratios for the operations of banks and foreign bank branches.
A notable change in the draft is the shift from the loan-deposit ratio (LDR) to the credit-deposit ratio (CDR). Under the draft, the indicator is determined based on total outstanding credit and total mobilized funds as defined in the regulation, rather than limiting the measure to lending and deposits.
The calculation components largely inherit current regulations, including corporate bond investments and off-balance sheet commitments on the credit side, as well as funding sources outside deposits on the funding side.
The draft also adjusts how State Treasury deposits are treated in the calculation, following the previously set roadmap. Under Circular 22/2019/TT-NHNN (as amended by Circular 26/2022/TT-NHNN), the portion of State Treasury term deposits counted toward mobilized funds has been reduced over time and is scheduled to be eliminated entirely from 2026.
In the new draft, non-term deposits continue not to be counted as mobilization, while 80% of term deposits of the State Treasury are counted.
For “credit facilities” (cấp tín dụng), the draft defines total credit exposure to include:
The draft continues to target maintaining the credit-to-deposit ratio at up to 85%, consistent with the current regulation.
Beyond changes to safety ratio calculation methods, the draft adds a new group of Basel III standards indicators, including the leverage ratio (LEV), the liquidity coverage ratio (LCR), and the net stable funding ratio (NSFR). These indicators are not defined in the current framework.
SBV notes that Basel’s leverage ratio uses components that are not risk-based and is applied in parallel with the risk-based capital adequacy framework under Basel III. The purpose is to curb excessive accumulation of leverage in the banking system. SBV describes LEV as an additional tool to risk-based capital requirements to help ensure banks’ safety.
SBV also states that several countries and jurisdictions are applying this ratio, including the ECB, Malaysia, Singapore, Hong Kong, Taiwan, and the United States.
Article 14 of the draft sets the implementation timeline for LCR and NSFR. From 01/01/2028, banks and foreign bank branches must fully comply with both ratios.
During the preceding period, credit institutions continue to comply with existing regulations 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 adopter mechanism. As soon as the Circular takes effect, banks may register with the SBV to adopt LCR and NSFR, provided they immediately meet the minimum 100% for both ratios.
Early adoption must be supported by confirmation from an independent auditing firm and a management opinion from the board indicating full compliance with the requirements, with no qualified opinions at the most recent date.
Section 15 of the draft addresses liquidity risk management. Banks must build and implement a liquidity risk management system aligned with internal control regulations, ensuring that risk identification, measurement, monitoring, and control are carried out in full.
The draft also differentiates requirements between institutions that remain under Circular 22 and those that have transitioned to the new framework. For the first group, liquidity management continues under current rules; for the second group, institutions must comply with the LCR and NSFR requirements in the draft.
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