Monday, 6 December 2021

MBBank’s compliance-driven approach on liquidity risk management placed it at the pole position

5 min read

By The Asian Banker

The bank established advanced measures and processes to monitor liquidity risk and allocate responsibility for liquidity management. The bank enhanced its liquidity crisis capabilities and delivered KPIs above the minimum requirement during the pandemic.

  • The bank delivered a much higher Tier 1 capital than the regulatory requirements and is in the lead in interbank lending
  • The responsibility allocation set up of the bank enables overseeing of liquidity position at the HQ level and control liquidity risk via decentralised mandates
  • The bank leveraged compliance-driven focus to obtain approval from the State Bank of Vietnam

Singapore, 3 August 2021 — Military Commercial Joint Stock Bank (MBBank) was recognised for its Achievement in Liquidity Risk Management at The Asian Banker Risk Management Awards 2021.

Balance Sheet Position: The bank delivered a much higher Tier 1 capital than the regulatory requirements and is in the lead in interbank lending

MBBank has developed advanced measures such as liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) to manage its liquidity position both short term and long term. As such, MBBank has achieved a strong placement among its peers in the Vietnamese market for banks.  

The bank’s funding cost was lowest among its peers, 3.9% versus 5.2%, the industry average. As of 30 June 2020, the bank’s Tier 1 capital ratio was 10.24 %, compared to the minimum regulatory requirement of 6%. Similarly, MBBank delivered a 10.14% performance when measured for its capital adequacy ratio (CAR) by the end of 2020. The regulatory requirement was 8%. 

With respect to its peers, MBBank maintains a leading position in the interbank lending market. The interbank lending business grew 23% compared to the year before, contributing significantly to the bank’s profitability. The bank’s CAR for the national currency VND and USD remained high compared to the requirements set by the State Bank of Vietnam. MBBank holds many types of liquid assets such as interbank transfer and investment securities issued by domestic financial institutions and legal entities.

Monitoring Capabilities: The responsibility allocation set up of the bank enables overseeing of liquidity position at the HQ level and control liquidity risk via decentralised mandates

MBBank has given the board of directors the highest level of responsibility for liquidity risk management by providing permits to issue policy mandates to design and enforce appropriate processes for liquidity management. Between the board of directors and treasurer, the bank has installed several committees and designed their rules of engagement for efficient works around liquidity management.

The daily monitoring of limits, balances of current accounts, and transactions can take into account both regulatory requirements and market value consideration before valuation and accounting exercises.

MBBank has continuously invested in systems that are capable of sourcing relevant information from external and internal sources and produce reports that internal demands and the supervisory authority have set. The reports can provide timely warning, signal movement in liquidity risk, and indicate stress on long-term positions to deal with potential liquidity shortages.

MBBank has in place systems that can perform analysis based on predictive models and capable of signalling customer behaviour changes with respect to loan obligations. 

Of relevance for the current pandemic that stressed the liquidity positions of financial institutions globally, MBBank has developed crisis management and contingency plans to deal with abnormal liquidity situations and being prepared for unwanted situations, such as bank runs. These capabilities allowed the bank to conduct stress tests and report periodically to the supervisory authority of the financial market in Vietnam. 

Achievement in the Year Under Review: The bank leveraged compliance-driven focus to obtain approval from the State Bank of Vietnam

In 2020, many Vietnamese financial institutions accelerated their compliance efforts with international standards provided by the Bank for International Settlements.  

MBBank completed the certification for Basel II and is one of the first banks approved by the State Bank of Vietnam that comply with Basel II.

About The Asian Banker Risk Management Awards

The Asian Banker Risk Management Awards is a landmark recognition programme designed to identify emerging best practices and outstanding achievements of the best run risk management teams in financial institutions across Asia Pacific, the Middle East, and Africa, participating on international and country-level. Recipients of these awards are honoured in a gala event that recognises their efforts in executing sound operational processes from which participants can both learn and benefit. A stringent and comprehensive evaluation process determines the awardees.

About The Asian Banker 

The Asian Banker is the region’s most authoritative provider of strategic business intelligence to the financial services community. The global research company has offices in Singapore, Malaysia, Manila, Hong Kong, Beijing, and Dubai, as well as representatives in London, New York and San Francisco. It has a business model that revolves around three core business lines: publications, research services, and forums. The company’s website is www.theasianbanker.com.

You may visit the Asian Banker Risk Management Awards page at https://www.asianbankerawards.com/riskmanagement/index.php.

For further information, you may get in touch with:

Mobasher Zein Kazmi 

Head of Research

Tel: (+61) 452 514 145

mkazmi@theasianbanker.com



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