The Chief Inspector of the central bank has issued Inspection Conclusion No. 10/KL-TTNH3, detailing findings from a comprehensive review of the bank’s operations.

The inspection identified multiple deficiencies in PBVN’s internal regulations, including those governing credit extension, foreign exchange transactions, overseas remittances, and anti-money laundering practices.

Violations were also found in the bank’s compliance with rules on credit activities, covering lending, guarantees, and letters of credit (L/C). Additional shortcomings were noted in debt classification, provisioning, the use of provisions to handle risks, and the management and recovery of bad debts, including off-balance-sheet exposures.

A sample review of customer credit files revealed further issues related to lending conditions, appraisal and approval processes, post-disbursement monitoring, collateral management, and debt restructuring.

The inspection also pointed to weaknesses in the implementation of the bank’s restructuring plan associated with bad debt handling for the 2021-2025 period. Several targets under the plan remain unmet, while some required measures have yet to be fully specified. Internal governance, executive oversight, and internal audit functions have not adequately addressed underperforming areas.

Compliance lapses were also detected in documentation related to foreign exchange transactions and overseas transfers.

In terms of governance, risk management, and internal control systems, the inspection found that PBVN had not established effective early warning mechanisms to detect violations. Notably, the bank lacks an internal auditor dedicated to information technology audits and related applications.

According to the inspection authority, these shortcomings stem from both objective and subjective causes. External factors include adverse market conditions affecting business operations and customer-related risks.

However, internal factors played a significant role, including insufficient oversight by the Members’ Council, executive management, supervisory board, and internal control systems, allowing violations to occur.

The bank’s internal policies and procedures were found to be incomplete, unclear, and not fully aligned with legal requirements, leading to inconsistent compliance across departments and branches. Some staff and units were also deemed insufficiently rigorous in adhering to both legal regulations and internal rules.

The inspection authority determined that the Members’ Council, executive board, supervisory board, and leaders of relevant units and branches across different periods bear overall responsibility for the violations.

An administrative penalty has been imposed on PBVN for breaches related to internal regulations, lending conditions, and foreign currency lending practices.

The inspection conclusion also includes recommendations requiring the bank’s leadership to review responsibilities, identify root causes, and take disciplinary actions against individuals and units involved.

PBVN has been instructed to develop a detailed remediation roadmap, closely monitor corrective actions, and implement appropriate measures in line with legal requirements and operational realities to ensure safe and stable operations.

Public Bank Vietnam is a wholly foreign-owned bank under Malaysia’s Public Bank Berhad.

Established in 2016, the bank inherited all assets, liabilities, rights, and obligations from the former VID Public joint venture bank.

Its headquarters is located at Hanoi Tungshing Square, 2 Ngo Quyen Street, Hoan Kiem District, Hanoi.

Tuan Nguyen