Shinhan Bank’s Da Nang Branch Advised by State Bank of Vietnam to Improve Loan Asset Management

【Hanoi, Vietnam—Correspondent Kim Jun-seok】Shinhan Bank Da Nang Branch was criticized for deficiencies in the management of certain credit operations following an inspection by the State Bank of Vietnam. It was also advised to improve risk management related to assets acquired or created with loan proceeds.
According to local media reports on the 23rd, the State Bank of Vietnam’s Region 9 Headquarters notified Shinhan Bank Da Nang Branch of the inspection findings on the 21st.
The inspection covered the branch’s overall operations, including credit extension activities; loan classification and the setting aside and use of provisions for risk treatment; the handling of nonperforming loans and the processing and recovery of off-balance-sheet receivables after risk treatment; extensions of loan repayment periods, interest reductions and the maintenance of loan classifications; compliance with anti-money-laundering and counter-terrorist-financing regulations; foreign-exchange trading and overseas remittances; and the implementation of interest-rate cuts in accordance with directives from the Governor of the State Bank of Vietnam.
The inspection found that Shinhan Bank Da Nang Branch had implemented the State Bank of Vietnam’s regulations and Shinhan Bank Vietnam’s credit extension guidelines relatively well. The branch also demonstrated a satisfactory level of compliance in asset classification; the standards and methods for setting aside provisions; the use of provisions for risk treatment during business operations; measures to recover nonperforming loans and off-balance-sheet receivables; compliance with anti-money-laundering regulations; compliance with overseas remittance and foreign-exchange trading rules; and the implementation of interest-rate reduction policies.
However, some deficiencies were identified in credit extension. The loan review and approval processes were found to be somewhat inadequate and incomplete, while post-loan checks and oversight of how loan proceeds were used, as well as the collection and management of documents and information, were not sufficiently thorough. The branch was also criticized for failing to review and standardize linkage provisions among internal regulations applicable at different times in a timely manner.
In particular, Shinhan Bank Da Nang Branch was warned about risks related to managing assets created with loan proceeds. The authorities explained that failing to thoroughly track and manage assets formed for their stated loan purposes could make it difficult to detect early changes in a customer’s financial condition, cash flow and use of funds during loan inspections and oversight.
Accordingly, the head of the State Bank of Vietnam’s Region 9 Inspection Department required Shinhan Bank Da Nang Branch to implement corrective measures to minimize risks and ensure safe and efficient operations in compliance with the law.
[email protected] Kim Jun-seok Reporter