HCMC – The central bank’s bank inspection and supervision agency will issue credit ratings for local credit institutions and foreign bank branches in a bid to ensure transparency in banking sector operations.
The rating results will be publicized to create a foundation to determine credit growth quotas on the basis that banks with high operational efficiency will be assigned with higher credit growth targets than those with lower efficiency.
The banking inspection and supervision agency was established via the merger of several departments of the central bank. The contents of supervisory activities are under consideration.
Inspectors of the central bank will perform quarterly credit ratings for each bank, based on the assessment of six main components on the bank’s capability and operation. The rating will be in line with the bank’s scale and complexity, along with its characteristics in operation and risk management.
The ratings will be used to evaluate the credit worthiness of the banking system and offer necessary actions for on-site inspection.
Given the credit growth target of 15-17% in 2012, the central bank will categorize credit institutions into four groups: healthy, average, below average and weak with respective ratings of A, B, C and D.
At the Vietnam Business Forum held in Hanoi in December, the Banking Working Group warned the application of only one credit growth target to all banks, irrespective of financial strength, risk management capability or the nature of lending, would not bring the best result for the economy.
If credit growth continues to be restricted, such restricted growth should be allocated to the banks capable of making the best use of it, based on objective measures. Healthy credit institutions should be assigned with higher credit growth rates than the weak ones, said the petition of the Banking Working Group.
In Vietnam, apart from some private agencies publishing the credit ratings of their banks, the Credit Information Center (CIC) of the central bank has performed ratings for credit institutions through providing services based on specific criteria. However, the country is still lacking an independent and legitimate credit rating agency with high reputation and professional criteria.
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