Representatives of MB and Experian at the signing ceremony in Ha Noi on Tuesday. — File Photo

The Military Commercial Joint Stock Bank (MB) and Experian, an Ireland-based global information services company, signed an agreement on Tuesday to implement a Credit Risk Modelling project for Basel II.

Under the contract, Experian will provide consultancy and teach advanced methodologies, including developing software to measure credit risk in accordance with Basel II; helping complete credit risk estimates under the Internal Rating-Based (IRB) method; and helping MB put the system into operation by 2019.

Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision (BSBS).

Basel II improves on Basel I, first enacted in the 1980s, by offering more complex models for calculating regulatory capital. Essentially, the accord mandates that banks holding riskier assets should be required to have more capital on hand than those maintaining safer portfolios. It also requires companies to publish both the details of risky investments and risk management practices.

Speaking at the signing ceremony, Le Cong, vice-chairman of MB, said the bank has identified the Risk Management Platform as one of the two important areas in its development strategy for the 2010-15 and 2017-21 periods. “We have implemented many solutions to continuously improve our risk management capacity and meet the business development and compliance requirements of the State Bank of Viet Nam,” Cong said.

MB is among the 10 commercial banks chosen by the central bank to implement the pilot phase of Basel II in the 2014-17 period. The bank has upgraded its operations, a compulsory requirement, making its banking operations safer and more efficient.

Nick Boyle, executive director of Experian Southeast Asia, said MB is one of the top banks in Viet Nam, and it will implement the best international practices and get Basel II accreditation by 2020.

Determined to launch Basel II successfully, MB has been perfecting its management model by applying international norms and practices to change its approach towards risk-based business decisions in areas such as operational management, risk management model, risk management policy framework, measurement tools, and effective risk management. — VNS