Determination to meet the goals of best protecting depositors, maintaining public confidence on the financial and banking system

Reinforcing organization and consolidating legal framework

In 2012, DIV was strengthened with the appointment of senior officials by the Prime Minister and the State Bank’s Governor. Especially, the Law on DI was passed by the National Assembly and took effect from January 1, 2013. This is deemed as the highest legal basis for DI policy to carry on creating positive impacts and keep up with the development of financial markets. As the sole organization directly implementing DI policy, DIV actively cooperated with the State Bank, bodies under the National Assembly, the Government to take part in the course of law building. For the time being, DIV has been eagerly researching and coordinating with related organizations to make recommendations to drawing up documents providing guidelines on the implementation of the DI Law.

While these guiding documents have been being prepared, DIV has actively recommended to the Government, the State Bank, Ministry of Finance and other related ministries guidelines for insured institutions on implementation of the current DIV policy (pay-out, premium, information and reporting, financial remuneration regimes….). This is to ensure that DI policy is carried out in a continuous and timely manner.

Implementing operations effectively and synchronously throughout the deposit insurance system

Newly granting, replacing, additionally granting, re-granting 3,146 deposit insurance participation certificates

In 2012, the network of insured institutions underwent big changes. As for cases of bank acquisition, merging, renaming, DIV provided guidelines, received, examined files and made decisions on granting or revoking deposit insurance participation certificates in order to protect rights and legal interests of depositors. Therefore, public awareness about depositors’ interests and insured institutions’ spirit of observing legal regulations on DI certificates were enhanced. In the same year, DIV newly granted, replaced, additional granted, reissued 3,146 DI participation certificates (nearly a 4-fold increase against 2011) to insured institutions. DIV also revoked 514 DI participation certificates (a 6-fold increase over 2011) in cases of bank acquisition, merging, renaming, and dissolution.

Collected DI premiums up by 27% against 2011

DIV collected from 1,229 insured institutions premiums of 2,057 billion VND, 27% up against 2011. Total deposits of insured depositors were estimated at around 1,500 trillion VND (about 1,100 trillion VND in 2011). Most insured institutions abided by the regulations on premium assessment and payment, contributing to building capital resources of DIV for better safeguarding depositors’ interests.

Good management of DI Fund

In order to enhance its financial capacity, DIV managed and used temporarily idle capital on the principle of ensuring DIV’s normal operations and at the same time, preserving and increasing its capital. Based on updates on, assessment of changes in financial market, DIV worked out the structure, shares, and terms of the investment portfolio toward safety and effectiveness. With the earning of more than 1.3 trillion VND in 2012, investment helped consolidate DIV’s financial capacity.

Risk supervision over 100% of insured institutions

DIV supervised 90 commercial banks, 11 non-banking credit institutions, 1,136 People’s Credit Funds (PCF) and Central PCFs. Based on reports by insured institutions, DIV analyzed, evaluated their performance, and spotted out weaknesses, violations of banking prudence in a timely manner. Supervision showed that insured institutions’ activities were of high risk, number of the insured institutions which needs to be paid more attention was on the rise, credit quality decreased, liquidity improved toward the year-end while the inter-bank market was not really robust. DIV already suggested measures for these problems to the State Bank and other relevant organizations. As for the insured institutions, DIV sent early warnings and in coordination with State Bank’s local branches investigated so as to work out proper solutions.

On-site examination of the institutions also fulfilled the plan with 294 institutions being examined. Together with off-site supervision, on-site examination helped assess insured institutions more accurately in terms of their operations, observance of legal regulations on DI as well as current and potential risks confronting them.

Financial support- helping credit institutions to overcome difficulties

In 2012, some insured institutions, especially local PCFs faced a lot of difficulties. DIV constantly monitored the situation and sent working teams to the site for figuring out solutions for the short-term difficulty of illiquidity. DIV recovered 160 million VND from supporting loans to Phuong Tu PCF (Hanoi). Currently, the PCF is on the recovery process.

Attempting to get recoveries in receivership and liquidation

DIV constructively coordinated with related organizations to instruct liquidation committees to work out solutions for getting recoveries according to applicable law.  Liquidation committees recovered 1.07 billion VND, of which 0.99 billion VND was returned to DIV in 2012. Besides, upon the approval by the Prime Minister, DIV cooperated with relevant bodies to write off loans worth 10.4 billion VND for 20 PCFs which were dissolved before 2005.

Public relations meeting the goal of raising public awareness of DI

Public relations were implemented under a clear and effective plan, reached the target of raising public awareness about DI, actively support designing the Law on DI and guidelines documents. In addition to continuously improving the quality of internal publications, DIV also took part in holding big communication programs which held public interest and provided updates on the implementation of DI policy to the public.

Modernizing DI operations

Since integrated information management system is considered as a key factor to support DIV in executing its functions, tasks and developing step by step in conformity with reality and international practices, Financial Sector Modernization and Information Management System (FSMIMS) Project has been being carried out on schedule. The implementation of FSMIMS Project -DIV component was highly rated by the State Bank and supervision teams from World Bank. Together with studying international experience and practices, FSMIMS Project-DIV component will create a basis for DIV to modernize its operations towards international standards and meet requirements of reality.

Pro-actively doing applied research for better safeguarding depositors

In 2012, DIV’s applied research constructively assisted in building the Law on DI and guiding documents. On the principle of exploiting collective intelligence and power, as the sole organization responsible for directly implementing DI policy, DIV proposed quality recommendations on DI. Having identified depositors as those directly protected by DI policy, DIV’s applied research projects aimed at nothing but protecting legal interests of depositors, contributing to ensuring safety of the banking system and enhancing DIV’s operational effectiveness. Through doing applied research in a systematic fashion, DIV’s operations were improved; macro-economic reports were highly appreciated by academic circle.

As approved by the Prime Minister, the Financial Sector Assessment Program in Vietnam (FSAP Vietnam) was officially launched in 2012.  DIV is a member of the steering committee of this Program. Information on DI is an important input to the Program. In 2012, DIV also became a member of Training and Conference Committee under International Association of Deposit Insurer (IADI). This membership will enable DIV to take advantage of 12-year experience in implementing DI policy and technical supports from international organizations when necessary to strengthen its capability.

9 key tasks and 6 measures in 2013

Entering 2013, on the financial and banking front, the Party and the Government has set the key tasks of conducting tight, cautious, yet flexible monetary policy in harmony with fiscal policy; keeping interest and foreign exchange rate in accordance with movements in financial markets and macro-economic balances; restructuring credit institutions in in parallel with solving the problem of bad debts.

Based on this orientation, DIV has worked out 9 focal tasks and 6 measures for 2013, of which the top priority is to actively make recommendations to drawing up documents providing guidelines on implementation of Law on DI. The next priority is to implement operational activities and measures aiming to better protect legal interests of depositors, contribute to maintaining the safety of the banking system. This task is elaborated as: monitoring and designing plans on dealing with changes which may affect depositors; improving quality of supervision and examination together with building an early warning system; resolving failed insured institutions in a timely and orderly manner; speeding up liquidation of dissolved PCFs; prudently and effectively managing DI fund in accordance with the Law on DI; promoting PR activities to assist in drawing  up and issuing guiding documents for implementation of Law on DI; diversifying communication channels and improving PR publications. Apart from that, DIV will proactively do applied research and make policy recommendations, cooperate with international deposit insurers and other organizations, continue to effectively implement FSMIMS project on schedule; suggest financial and remuneration regimes for DIV; enhance training of DIV staff; focus on building up a qualified, united team striving for the common goal of developing the DI system…

DIV has also formulated 6 measures to fulfill these aforementioned tasks, namely: strengthening internal solidarity, boosting up the close and unified cooperation among units of the DI system; choosing right persons for right jobs based on their ability and strengths, improving working efficiency; making use of assistance from the Party’s organizations, the National Assembly, the Government and cooperation with related domestic and international agencies; promoting applied research and technological application to support operational activities; monitoring and examining the implementation of the tasks and periodically assessing the results to work out measures to enhance effectiveness; launching emulation movements for excellently doing jobs and implementing the policy on reward and punishment in time throughout the whole system.