Thông tư 12/2018/TT-BTC về giám sát tài chính, đánh giá hiệu quả đầu tư vốn Nhà nước tại tổ chức tín dụng do Nhà nước giữ 50%, 100% vốn điều lệ

THE MINISTRY OF FINANCE 

Circular No. 12/2018/TT-BTC dated January 31, 2018 of the Ministry of Finance on guiding the financial supervision, evaluation of the efficiency of state capital investment in wholly state-owned credit institutions and credit institutions of which more than 50% charter capital is held by the state

Pursuant to the Law on Enterprises dated November 26, 2014;

Pursuant to the Law on Credits Institutions dated June 16, 2010;

Pursuant to the Law dated November 26, 2014 on management and utilization of state capital invested in the enterprises’ manufacturing and business operations;

Pursuant to the Government’s Decree No. 87/2015/ND-CP dated October 06, 2015 on supervision of state capital investment in enterprises; financial supervision, performance assessment and disclosure of financial information of state-owned and state-invested enterprises;

Pursuant to the Government’s Decree No. 93/2017/ND-CP dated August 07, 2017 on the financial regime applicable to credit institutions, branches of foreign banks and financial supervision, assessment of effectiveness of state capital investment in wholly state-owned credit institutions and partially state-owned credit institutions;

Pursuant to the Government’s Decree No. 87/2017/ND-CP dated July 26, 2017 defining Functions, Tasks, Powers and Organizational Structure of Ministry of Finance;

At the request of Director of Department of Banking and Financial Institutions;

Minister of Finance promulgates a Circular to provide guidance on financial supervision, evaluation of efficiency of state capital investment in wholly state-owned credit institutions and credit institutions of which more than 50% charter capital is held by the state.

Article 1. Scope of adjustment

This Circular provides guidance on financial supervision and evaluation of efficiency of state capital investment in wholly state-owned credit institutions and credit institutions of which more than 50% charter capital is held by the state as prescribed in the Government’s Decree No. 93/2017/ND-CP dated August 07, 2017 on the financial regime applicable to credit institutions, branches of foreign banks and financial supervision, assessment of effectiveness of state capital investment in wholly state-owned credit institutions and partially state-owned credit institutions (hereinafter referred to as "Decree No. 93/2017/ND-CP”).

Article 2. Subject of application

1. Wholly state-owned credit institutions and credit institutions of which more than 50% charter capital is held by the state (hereinafter referred to as “credit institutions”).

2. Relevant authorities, organizations and individuals.

Article 3. Financial plans, establishment of criteria for evaluation, rating and financial supervision, evaluation of efficiency of state capital investment in credit institutions

1. The annual financial plan of a credit institution shall be prepared in accordance with regulations in Clause 1 Article 25 of the Decree No. 93/2017/ND-CP, and include:

a) The plan on financing and utilization of finances, including bad debt ratio and loss ratio, which is made according to the Appendix 1 enclosed herewith;

b) The plan on incomes and costs, in which the criteria for evaluation of investment efficiency, including profit before tax, net income, return on equity (ROE), return on assets (ROA) and other criteria as prescribed in the Appendix 2 enclosed herewith;

c) The plan on labor and salaries which is made according to the Appendix 3 enclosed herewith.

2. The preparation of financial plans, establishment of criteria for evaluation, rating and financial supervision, evaluation of efficiency of state capital investment in credit institutions shall be carried out in accordance with regulations in Article 25, Article 29, Article 30, Article 31 and Article 32 of the Decree No. 93/2017/ND-CP.

Article 4. Methods for determining criteria for evaluation of efficiency of state capital investment in credit institutions

1. Gross revenue:  This criterion is determined according to the annual financial statements duly audited of the credit institution.

2. Net income and return on equity:

a) Net income:  Gross profit from business activities less provisions for credit losses, the current corporate income tax and the corporate income tax deferred.

b) Return on equity (ROE):

Where:

- The net income is determined in accordance with regulations in Point a Clause 2 of this Article.

- Average shareholders’ equity in year:

The shareholders’ equity is available on the balance sheet of the credit institution, consisting of: Paid-in capital of the credit institution, its funds, exchange rate difference, differences upon asset revaluation and retained earnings.

3. Bad debt ratio and loss ratio:

a) The bad debt ratio shall follow the State Bank of Vietnam’s regulations on classification of assets, ratio and method of establishment of provisions for credit losses, and use of provisions for credit losses in the banking activities of credit institutions and foreign banks’ branches.

b) The loss ratio is the total amount of unrecoverable debt (group-5 debt) when compared to total outstanding debt in accordance with the State Bank of Vietnam’s regulations on classification of assets, ratio and method of establishment of provisions for credit losses, and use of provisions for credit losses in the banking activities of credit institutions and foreign banks’ branches.

4. Compliance with laws:

a) Policies and regulations are mentioned in Clause 1 Article 30 of the Decree No. 93/2017/ND-CP on investment, management and utilization of state capital invested in credit institutions, taxes (excluding personal income tax), payments made to state budget, and regulations on financial reporting and reporting for the purpose of financial supervision.

b) Total fine used as the basis for evaluation and rating shall be the sum of amounts payable specified in decisions on imposition of penalties for administrative violations detected in a fiscal year, excluding compulsory payments for implementing remedial measures.

5. Provision of public products and services (if any):

Provision of public products and services means the direct engagement in national defense and security or provision of public services as per the Government’s policies through tender or order placement or the Government’s assignments. This criterion shall be evaluated based on the degree of completion in terms of quantity and quality of public services. The agencies representing owners shall set up evaluation criteria in conformity with fields of operations, specialties and distinction.

6. Determination of the criteria defined in Clause 1, Clause 2, Clause 4 and Clause 5 of this Article shall eliminate the impact factors mentioned in Clause 2 Article 30 of the Decree No. 93/2017/ND-CP.

Article 5. Methods for evaluation and rating of credit institutions

The efficiency of state capital invested in a credit institution shall be evaluated according to the levels of fulfillment (A, B, C) of criteria for evaluation and rating applied to the credit institution as required by the State Bank of Vietnam. To be specific:

1. Methods for evaluation of fulfillment of each criterion:

a) Criterion 1: Gross revenue

- A credit institution is given “A” rating if its gross revenue earned is equal to or higher than the planned one.

- A credit institution is given “B” rating if its gross revenue earned is lower than but equal to at least 90% of the planned one.

- A credit institution is given “C” rating if its gross revenue earned is lower than 90% of the planned one.

b) Criterion 2: Return on equity (ROE)

- A credit institution is given “A” rating if it has attained a ROE equal to or higher than the planned one.

- A credit institution is given “B” rating if it has attained a ROE lower than but equal to at least 90% of the planned one.

- A credit institution is given “C” rating if it has attained a ROE lower than 90% of the planned one.

- With regard to credit institutions that incur planned losses:  “A” rating is given to the one incurring actual loss lower than the planned one; "B" rating is given to the one incurring actual loss as planned, and “C” rating is given to the one incurring actual loss higher than the planned one. Determination of actual loss versus the planned loss shall exclude the performance of additional duties.

c) Criterion 3: Bad debt ratio and loss ratio

- A credit institution is given “A” rating if it has actual bad debt ratio and loss ratio equal to or lower than the planned ones, and the bad debt ratio and the loss ratio lower than 3% and 2% respectively.

- A credit institution is given “C” rating if it has actual bad debt ratio and loss ratio higher than 110% of the planned ones, or the bad debt ratio higher than 3.5% or the loss ratio higher than 2.5%.

- A credit institution is given “B” rating if it is not given either “A” rating or “C” rating.

d) Criterion 4: Compliance with laws as prescribed in Clause 4 Article 4 herein

- A credit institution is given “A” rating if:

+ It is not reminded in writing or is not given 01 written reminder by the agency representing the owner or the financial authority of the invalid or late submission of supervision reports, report on credit institution rating, financial statements and any reports.

+ It is not liable to any decision on administrative penalties granted by a competent authority for violations against applicable regulations and policies. In case a credit institution faces administrative penalties, no more than 5% of its branches (including the head office) is liable to warnings or fines (each fine shall not exceed VND 70,000,000).

- A credit institution is given “C” rating if it has encountered one of the following circumstances:

+ The credit institution has not submitted supervision reports, reports on credit institution rating, financial statements or any regulated reports, or has presented invalid or late reports and has received at least three written reminders from the agency representing the owner or the financial authority.

+ It has faced fines for administrative violations, each fine of which is at least VND 100,000,000.

+ Managerial individuals of the credit institution have violated the laws during their performance of duties of the credit institutions and must face criminal prosecutions.

- A credit institution is given “B” rating if it is not given either “A” rating or “C” rating.

dd) Criterion 5: Provision of public products and services (if any)

- A credit institution is given “A” rating if it has fulfilled or surpassed the planned quantity and maintained the quality of public products or services in conformity to regulated standards;

- A credit institution is given “B” rating if it has fulfilled at least 90% of the planned quantity and maintained the quality of public products or services in conformity to regulated standards;

- A credit institution is given “C” rating if it has fulfilled below 90% of the planned quantity or failed to maintain the quality of public products or services in conformity to regulated standards.

2. Summation of evaluation results and rating of credit institution:

Credit institutions shall be evaluated and rated A, B or C according to the degree of fulfillment of evaluation criteria as required by the agency representing owner for each credit institution.  

Based on the degree of fulfillment of criterion 1, criterion 2, criterion 3 and criterion 4 mentioned in Clause 1 Article 30 of the Decree No. 93/2017/ND-CP, credit institutions shall be rated as follows:

- A credit institution is rated A if it has no criterion rated C, and has criterion 2, criterion 3 and criterion 4 rated A;

- A credit institution is rated C if it has criterion 2 and criterion 3 rated C, or either criterion 2 or criterion 3 rated B and the remaining criteria rated C;

- A credit institution is rated B if it is not rated either A or C.

3. Ranking of managerial individuals of a credit institution:

a) Accomplishment of missions:

- Accomplish criteria for assessment of performance of managerial personnel according to the guidelines of the Ministry of Home Affairs.

- With regard to a credit institution providing public products or services: Fulfill or surpass the quantity plan and maintain the quality of products or services in conformity to the regulated standards.

- Work at the credit institution is rated A.

b) Failure of missions in one of the following circumstances:

- Fail to fulfill criteria for assessment of performance of managerial personnel according to the guidelines of the Ministry of Home Affairs.

- Fulfill below 90% of the return on equity set by the agency representing the owner; With regard to a credit institution providing public products or services: Fulfill below 90% of the quantity plan or fail to maintain the quality of products or services in conformity to the regulated standards.- Work at the credit institution is rated C.

c) Completion of missions: Other circumstances that are not stated in Point a, Point b Clause 3 of this Article.

Article 6. Effect

1. This Circular takes effect on March 19, 2018 and applies from the fiscal year 2018.

2. Any difficulties arising in the course of this Circular should be reported to the Ministry of Finance for consideration./.

For the Minister

The Deputy Minister

Tran Van Hieu