Shinhan Bank has completed all three Pillars of Basel II ahead of schedule, which were regulated by the State Bank of Vietnam. — Photo courtesy of Shinhan Bank

Shinhan Bank Vietnam Limited (Shinhan Bank) has completed Pillar 2 of Basel II which assesses the bank’s internal capital adequacy, as prescribed in a circular of the State Bank of Vietnam (SBV).

The bank has now completed all three Pillars of Basel II ahead of schedule regulated by the SBV. These pillars affirm its capabilities, potential and risk management activities.

Pillar 2 of Basel II is the Internal Capital Adequacy Assessment Process (ICAAP), which includes measurement of material risks.

In October last year, the bank successfully implemented Pillar 1 and 3 of Basel II according to a standardised approach, ahead of the deadline required by SBV in a circular.

In addition, the bank has measured its interest rate risk in the banking book, concentration risk, settlement risk and other material risks.

It has also conducted stress tests for the most challenging scenarios to create an appropriate strategic plan based on economic capital, its own capital, and risk profile.

Shin Dong Min, CEO of Shinhan Bank in Viet Nam, said that building a comprehensive risk management framework has been one of the top priorities set by Shinhan Bank and Shinhan Financial Group.

“The completion of all three Pillars of Basel II will help us strengthen risk management, improve performance, ensure operation safety, and contribute to building a sustainable and transparent banking system," he said.

The bank has upgraded its system to allow for automated information processing from Risk Data Mart in a fast and accurate manner.

It has also implemented advanced standards set by the Basel Committee, such as the use of an Internal Ratings-based approach (IRB) to calculate total credit risk-weighted assets. — VNS