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OCB Announces Completion Of Implementation And Application Of Basel III And ILAAP

Mr. Nguyen Dinh Tung, General Director of OCB

Orient Commercial Joint Stock Bank (OCB) has announced that it has finished the implementation and application of liquidity risk management in accordance with Basel III, as well as European Central Bank’s ILAAP standards and market risk management according to the Internal models approach (IMA) (Advanced Basel II).

With Deloitte Vietnam’s assistance, OCB has refined its governance framework and associated regulations and developed automated measuring tools in line with advanced practices.

The bank’s dedication to good governance inside the organization and long-term economic growth is demonstrated by its persistent efforts to upgrade its risk management system to meet the highest requirements set by international regulators.

With the implementation of Basel III standards, OCB intends to concentrate on improving capital quality, buffering liquidity, and improving liquidity risk management. In particular, this will be accomplished through the two indexes LCR and NSFR, which will be based on the Basel Committee’s most stringent regulations.

The construction of the LCR and NSFR calculation tool has been finished by the bank, and the results of the calculations have been applied to the direction of business operations. This helps the bank strike a balance between pursuing growth goals and ensuring that the bank’s liquidity profile is sustainable.

At this time, OCB’s NSFR ratio is greater than 100%, which satisfies the standards of Basel and is comparable to other banks throughout the world that are adopting Basel III.

IMA implementation

The Deputy General Director of Deloitte Vietnam presented Mr. Le Thanh Quy Ngoc, the OCB Risk Manager, with a certificate commemorating the successful completion of Basel III, ILAAP, and IMA implementation.

In addition, the OCB was a pioneer in the adoption of the Internal Liquidity Adequacy Assessment Process (ILAAP), which is characterized by stringent liquidity management standards that are directed by the European Central Bank.

Forecasted results for the next three years at OCB indicate that the bank’s liquidity reserve is always stable, not only fulfilling the needs of medium- to long-term business development but also resolving challenges even in the worst market conditions, with the NSFR rate consistently exceeding 100%.

Not only at the management of capital requirements according to Circular 41/2016/TT-NHNN, but the application of the Internal Models Approach (IMA) also helps the bank strengthen its market risk management capacity through reviewing and upgrading the valuation model, VaR model, backtesting VaR, stressed VaR as well as putting VaR measurement criteria into continuous risk management activities.

The bank is able to monitor and manage risks in a manner that is more comprehensive and takes into account several dimensions after upgrading and adding VaR indicators to periodic metrics. Currently, according to the Internal Models Approach, OCB has reached the point where it has satisfied the capital need for market risk.

Mr Nguyen Dinh Tung

Mr. Nguyen Dinh Tung, General Director of OCB, spoke at the event

The State Bank acknowledged OCB as one of the first three banks in 2018 to finish risk management items in accordance with Basel II international standards.

OCB remains among the most advanced institutions in adopting Basel III in 2022. This announcement further demonstrates OCB’s commitment to regulatory leadership in the area of market and liquidity risk management.

“OCB in 2023 will continue to sprint to become a leading bank in compliance with international standards, advanced risk management systems, and in line with market trends,” remarked the general director, Nguyen Dinh Tung.

One of the things that is being done to ensure that the development process of OCB is secure, transparent, and efficient is that the management of market risk and liquidity risk is being brought up to date so that it is in line with the best practices that are now in use.

This serves as the foundation for OCB’s ongoing efforts to realize its vision of being the joint-stock commercial bank in Vietnam that is ranked highest in terms of all three of the following categories: growth rate, safety, and efficiency.

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