State-owned banks are struggling to raise capital to improve their capital adequacy ratio (CAR) in line with Basel II requirements. According to the National Financial Supervisory Commission (NFSC), the average capital adequacy ratio (CAR) of the credit institution system in 2018 has reached 11.1 per cent thanks to the 12.2 per cent surge in owner’s equity capital and a 10.8 per cent rise in total risk weighted assets. Regulatory Tier 1 capital to risk weighted assets has thus been calculated at 8.8 per cent for 2018, a higher ratio than 2017’s 7.8 per cent. Another unofficial research, however, showed that the application of Basel II capital safety standards at the 10 pilot banks (including Vietcombank, VIB, VPBank, and OCB) has resulted in these banks having their CAR significantly lower compared to those promising figures released by the NFSC. Specifically, the CAR of four state-owned banks has dropped below 8 per cent with Basel II, down from the almost 9 per cent they had scored prior to applying the standards. According to the bank industry report 2019 of Vietcombank Securities (VCBS), following Circular No.41/2016/TT-NHNN, the time of application of Basel II for domestic credit institutions will start from January 1, 2020…. Read full this story
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