Under Circular No. 52/2018/TT-NHNN, which will take effect from April 1 this year, commercial banks, financial companies, financial leasing firms, co-operative banks and branches of foreign banks will be rated. As for commercial banks, the SBV will classify them into two groups: large-sized commercial banks with total assets of more than 100 trillion VND (4.27 billion USD) and small-sized banks with total assets of below 100 trillion VND.
The credit institutions and foreign bank branches will be classified in five groups – A, B, C, D and E – with A representing the best performing and E the worst.
The classification will be made based on quantitative and qualitative criteria.
Qualitative criteria will measure the health of the institutions’ operations through statistics on assets and capital, as well as financial and business reports audited by independent auditors, while quantitative standards will gauge compliance with legal regulations of the institutions.
The criteria will be weighed in accordance with how important they are to the institutions’ performance and the supervision requirement.
The criteria are divided into six groups – capital adequacy, asset quality, management and earnings, as well as liquidity and sensitivity to market risk – called the CAMELS rating system – a recognised international rating system.
Before June 10 every year, the SBV’s Banking Supervision Agency will submit the ranking results of credit institutions and foreign bank branches of the preceding year to the SBV’s Governor for approval, which will be done before June 30.
Currently, credit institutions operating in Vietnam are ranked by international credit rating organisations such as Standard & Poor’s, Moody’s and Fitch, based on international standards./.
Source: VNS/VNA