MSB launches Circular 14 Project – Implementing the Internal Ratings-Based Approach to Capital Adequacy Ratio Calculation

Vietnam Maritime Commercial Joint Stock Bank (MSB) has successfully held the Kick-off Ceremony for the Project on Circular No. 14/2025/TT-NHNN, marking a significant milestone in its roadmap toward transitioning to the Internal Ratings-Based (IRB) approach.

Circular No. 14 was issued by the State Bank of Vietnam (SBV) to update the latest recommendations of the Basel Committee under the Basel III framework, inheriting foundational regulatory requirements from the preceding Circular No. 41. The implementation of Basel III is considered a crucial step to elevate risk management standards and capital adequacy, thereby enhancing systemic resilience against volatile financial market risks, as well as reinforcing investor and customer confidence.

For credit risk, in addition to the Standardized Approach (SA), commercial banks may opt for the Internal Ratings-Based approach to determine risk-weighted assets (RWA) and calculate capital adequacy. The IRB approach allows banks to internally develop models to estimate key risk parameters such as Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD). However, this approach imposes stringent requirements on data governance, information technology systems, as well as model development and model risk management to ensure full compliance with the Circular’s regulatory standards.

MSB’s Board of Management poses for a commemorative photo with representatives from the SBV and Ernst & Young Vietnam Co., Ltd. (EY) at the Project Kick-off Ceremony.

Over the past years, MSB has been one of the pioneering commercial banks in Vietnam to proactively research and deploy Basel II and Basel III standards, progressively adopting the IRB approach for internal governance. The development of an internal credit rating system and risk measurement models (PD, LGD, EAD), alongside their application to capital management, the Internal Capital Adequacy Assessment Process (ICAAP), and business operations, has provided MSB with a robust foundation to officially transition to the regulatory IRB approach.

The issuance of Circular No. 14 by the State Bank of Vietnam has officially established a comprehensive legal framework, enabling commercial banks to advance from the preparatory phase to official implementation of the IRB approach under regulatory supervision.

At the ceremony, the representative of the State Bank of Vietnam acknowledged MSB’s efforts in deploying Circular No. 14, while providing key strategic directives to ensure the project is executed efficiently, properly, and in strict compliance with the statutory provisions.

MSB affirms its strong commitment to enhancing risk management capacity in alignment with international best practices.

Speaking at the event, Mr. Nguyen Tien Duc – Head of MSB’s Risk Management Division – emphasized that the implementation of the IRB approach is not merely a matter of statutory compliance with the State Bank of Vietnam’s regulations, but also a strategic opportunity for MSB to elevate its risk management capacity in capital planning, stress testing, and growth regulation. This will enable the Bank to strengthen its financial resilience, safeguard asset quality, and establish a stable foundation for subsequent phases of development.

“MSB is fully committed to mobilizing comprehensive resources, executing the project methodically, and strengthening coordination with both internal and external stakeholders to ensure total fulfillment of Circular No. 14’s regulatory requirements in accordance with the prescribed roadmap,” Mr. Nguyen Tien Duc affirmed.

About MSB Established in 1991, through nearly 35 years of institutional growth and development, MSB has continuously expanded, achieving numerous key milestones in the banking and financial sector. To date, MSB operates 260 branches and transaction offices nationwide and has established correspondent banking relationships with nearly 400 banks across 45 countries and territories. Powered by a workforce of over 7,000 employees, the Bank currently serves more than 8 million individual customers and nearly 100,000 corporate clients.

At the close of the first quarter of 2026, MSB recorded steady growth, with pre-tax profit reaching approximately VND 1,890 billion (a 16% increase year-on-year, fulfilling 24% of the annual target), and total assets standing at nearly VND 413,000 billion. The Bank’s operational efficiency continued to be optimized, maintaining a Cost-to-Income Ratio (CIR) of 34.51%. Concurrently, prudential indicators were tightly controlled, with the Non-Performing Loan (NPL) ratio maintained at a low level of 1.73% and the Loan-to-Deposit Ratio (LDR) reaching 62.91%, ensuring high liquidity and strict compliance with the prudential regulations mandated by the State Bank of Vietnam.

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