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Banking & Finance

Moody CR Assessments for Vietnamese banks

Released at: 19:41, 13/06/2015

Moody CR Assessments for Vietnamese banks

Ratings agency provides assessment of nine local institutions based on new bank rating methodology.

by Thu Hoang

Moody’s Investors Service recently assigned Counterparty Risk Assessments (CR Assessments) to nine Vietnamese banks, all of which remained unchanged.

B1(cr) was assigned to the Vietnam Bank for Industry and Trade (Vietinbank) and the Bank for Investment and Development of Vietnam (BIDV).

The starting points for the CR Assessments of the two the government-controlled banks, before government support, are B2 and B3, respectively, based on the banks’ Adjusted BCA (baseline credit assessment) plus one notch. Moody’s then incorporates very high support assumptions from the Vietnamese Government (B1 stable).

B2(cr) was assigned to the other seven Vietnamese banks: the Asia Commercial Bank (ACB), the Military Commercial Joint Stock Bank (MB), the Saigon-Hanoi Commercial Joint Stock Bank (SHB), the Saigon Thuong Tin Commercial Joint-Stock Bank (Sacombank), the Vietnam Prosperity Joint Stock Commercial Bank (VP Bank), the Vietnam Technological and Commercial Joint Stock Bank (Techcombank), and Vietnam International Bank (VIB).

The CR Assessments assigned to the seven banks, which are majority-owned by private shareholders, are based on the following inputs: (1) the banks’ Adjusted BCAs plus one notch, and (2) moderate probability of government support.

Not-Prime (cr) short-term CR Assessments were also assigned to all of the Vietnamese banks.

The announcement from Moody’s follows the publication of its new bank rating methodology on March 16.

A CR Assessment is an opinion on the counterparty risk related to a bank’s covered bonds, contractual performance obligations (servicing), derivatives (e.g., swaps), letters of credit, guarantees, and liquidity facilities.

For Vietnamese banks the CR Assessment, prior to government support, is positioned one notch above their Adjusted BCAs. Moody’s then assigns government support assumptions, in line with the same support assumptions on deposits and senior unsecured debt.

Such assignments reflect Moody’s view that any support provided by government authorities to a bank and which benefits senior unsecured debt or deposits is very likely to benefit operating activities and obligations, reflected by the CR Assessments.

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