Vietnam Banks Face Discretionary Safety Ratio Risks; VCB Chairman Weighs In

Overview

Vietnam’s National Assembly is scrutinizing a draft law that would allow the State Bank of Vietnam (SBV) to apply ‘other safety ratios’ to banks, with lawmakers warning of ambiguity and potential systemic risks. Vietcombank (VCB) chairman Nguyen Thanh Tung weighed in, advocating for flexibility in credit limits and supporting banks as asset management agents for corporate bonds. The debate touches on core regulatory and market-structure issues for Vietnam’s banking sector.

Key Facts

• Lawmaker Do Duc Hien (HCMC) proposed that the government specify cases, conditions, and criteria for applying ‘other safety ratios’ to ensure consistency.
• Delegate Tran Thi Hien (Ninh Binh) warned that the undefined ‘other safety ratio’ could be abused and pose risks to the banking system.
• VCB chairman Nguyen Thanh Tung noted that credit limits and safety ratios create difficulties for banks undergoing restructuring or with negative equity.
• Tung supported allowing credit institutions to act as asset management agents for corporate bonds, citing Vietnam’s bond market at 10% of GDP versus regional peers.
• Vietnam’s credit-to-GDP ratio stands at 145%, according to Tung’s remarks.
• The draft law also includes provisions on crypto assets for anti-money laundering, aiming to remove Vietnam from the FATF ‘grey list’.
• VCB shares closed at VND 59,000 on August 6, 2026, on the HOSE.

What Happened

During a National Assembly discussion on amendments to the Law on the State Bank of Vietnam, the Law on Anti-Money Laundering, and the Law on Credit Institutions, several deputies raised concerns about a provision allowing the SBV to ‘apply one or several other safety ratios’ to achieve socio-economic development goals. Delegate Do Duc Hien suggested clarifying the provision or delegating to the government to define the cases, conditions, and duration of such applications. Delegate Tran Thi Hien echoed these concerns, noting the ambiguity could lead to abuse and systemic risk.

Vietcombank chairman Nguyen Thanh Tung, also a deputy, argued for more flexibility in applying credit limits and safety ratios, especially for banks undergoing restructuring or with negative equity. He also voiced support for allowing banks to act as asset management agents for corporate bonds, pointing to the underdeveloped bond market (10% of GDP) and heavy reliance on bank credit (145% of GDP). Tung further commented on the anti-money laundering law, stressing the need for crypto asset regulations to meet FATF standards, though he acknowledged significant implementation challenges for banks.

Market Context

Vietcombank (VCB) trades on the HOSE at VND 59,000 as of August 6, 2026. The stock is a bellwether for Vietnam’s banking sector, which faces regulatory changes and capital adequacy pressures. The debate over discretionary safety ratios comes amid broader efforts to strengthen the financial system and develop the corporate bond market, a key government priority. VCB’s strong fundamentals and state ownership make it a proxy for policy shifts affecting the sector.

Strategic Significance

For long-term investors, the outcome of this legislative debate will shape the operating environment for Vietnamese banks. Clearer rules on safety ratios could reduce regulatory uncertainty and support banks with weaker balance sheets, potentially benefiting the sector’s stability. VCB’s advocacy for flexibility and its push to expand into corporate bond agency services signal a strategic pivot toward fee-based income and capital market development. If enacted, these changes could enhance VCB’s role in the financial system and support its growth trajectory.

What to Watch

• Final wording of the amended laws, particularly the definition and conditions for ‘other safety ratios’.
• SBV’s subsequent circulars or guidelines on implementing the new provisions.
• VCB’s quarterly earnings and any updates on its corporate bond agency initiatives.
• Progress on FATF compliance and crypto asset regulations affecting banks.
• Market reaction to regulatory changes, including VCB’s share price movement on the HOSE.