Vietnamese banks need to improve corporate governance to reduce the risks to the banking system among other benefits, a seminar in HCMC heard Wednesday
Speaking at the meeting sponsored by the State Bank of Vietnam and US Department of Treasury, Le Thanh An, the US consul in HCM City, said the Treasury had an agreement with the SBV to provide assistance in a number of areas, including corporate governance.
"The recent financial crisis is a compelling reminder of the critical importance of corporate governance and supervision of the banking system. No country's financial sector is perfect, but every country can seek to improve governance to make banking a stable pillar of the economy."
David Hawkins, the US Treasury banking advisor, said good corporate governance would create public trust and confidence in banks and the banking system.
"To have effective corporate governance, the board needs to establish good policies and procedures, goals that promote transparency, and systems to implement them and to control risks, have sufficient audit functions and good management information systems to keep informed of deficiencies and initiate corrective action when problems are noted."
Boards members should be and remain qualified, including through continued training, for their positions. They should have a clear understanding of their role in corporate governance and be able to exercise sound judgment about the affairs of the bank.
Under the direction of the board, senior management should ensure that the bank's activities are consistent with its business strategy, risk tolerance, and policies.
Banks should have an independent risk management function including a chief risk officer with sufficient authority, stature, independence, resources, and access to the board.
Risk management information should be tested for accuracy periodically.
The governance of a bank should be adequately transparent to its shareholders, depositors, other stakeholders, and market participants.
The role of the State Bank of Vietnam is to provide guidance to banks for effective corporate governance.
It has to regularly perform a comprehensive evaluation of banks' overall corporate policies and practices, and evaluate their implementation through inspecting internal reports.
The central bank should insist on effective and timely remedial action by banks to address material deficiencies in their corporate governance policies and practices.
The government and the Asian Development Bank on Monday signed a US$630 million financing facility to help accelerate reforms of state-owned enterprises (SOEs) in the country. 