HDBank officially announces its compliance with Basel III standards and their comprehensive implementation in business and banking management

Three key benefits of Basel III implementation for Vietnamese banks

First, Basel III was designed to ensure the stability of the banking system. Looking back at history, Basel III was introduced in 2010 after the global financial system had suffered the financial crisis in 2008-2009. Basel III is regarded as a risk filter, helping the banking system avoid similar incidents in the future. Unlike Basel I and Basel II, Basel III requires banks to clearly specify a level of capital adequacy, liquidity and leverage.

Second, Basel III will enable banks to withstand extraordinary events. To comply with Basel III standards, banks are required to hold more capital and maintain larger reserve buffers to mitigate operational risks. In exchange, they will improve their liquidity and have sufficient reserve capital buffer to cope with unusual fluctuations in the financial market.

Third, Basel III is an international framework, so banks that comply with it will have easier access to international capital. Because Basel III standards are adopted by many banks in the world, banks that meet them will have an advantage in the international capital market.

Effort to meet Basel III standards

As one of the early pioneers in applying and completing Basel II, HDBank has recently announced its official compliance with Basel III standards and its comprehensive implementation of them in business and banking management. In fact, before the official announcement of Basel III adoption, HDBank had repeatedly expressed its determination to apply Basel III to the system. Besides constantly improving capital quality, asset quality and profitability, HDBank always strives to refine its policies, processes, and especially information technology applications to monitor, provide early forecasts and issue timely warnings of all risks. The prerequisite for Basel III adoption by banks is maintaining a control system with three pillars: Calculating the CAR coefficient based on Basel; applying the internal capital adequacy assessment process (ICAAP); and ensuring transparent information disclosure. The biggest challenge of Basel III for banks - raising the proportion of Tier I capital to a minimum 6% - is addressed very early by banks. Currently, HDBank is one of the few banks considered to be highly stable in all business and management operations, with a capital adequacy ratio (CAR) of 13.4%, an individual bad debt ratio of 0.96% (according to Circular 11/2021/TT-NHNN), 8.4% of short-term deposits used for medium and long-term loans - lower than the regulatory level of 34%, and an outstanding debt/mobilization ratio of 81.1% - compared to the maximum regulatory level of 85%.