Regulations on the Internal Capital Adequacy Assessment Procedures of Commercial Banks

商业银行内部资本充足评估程序规定

ຂໍ້ຕົກລົງວ່າດ້ວຍ ຂະບວນການປະເມີນຄວາມພຽງພໍຂອງທຶນ ພາຍໃນທະນາຄານທຸລະກິດ

Summary

This regulation requires commercial banks to establish internal capital adequacy assessment procedures, clearly defining the risk management responsibilities of the board of directors and senior management, and specifying the implementation principles and components of core elements such as stress testing and risk appetite.

Articles

Article ມາດຕາ 1

Article 2 Internal Capital Adequacy Assessment Process of Commercial Banks
The Internal Capital Adequacy Assessment Process of commercial banks, hereinafter referred to as the "Capital Adequacy Assessment Process", is the establishment of policies and procedures to maintain capital adequacy and manage risks in line with the form, size, nature, and complexity of the products and services of the commercial bank.

Article ມາດຕາ 2

Article 2 Interpretation of Terms
The terms used in this agreement shall have the following meanings:

1. Commercial bank means a commercial bank and a branch of a foreign commercial bank established and operating lawfully under the laws of the Lao PDR;

2. Stress testing means testing of hypothetical crisis scenarios that may actually occur by assessing capital adequacy to cope with such crisis;

3. Risk appetite means the level of various risks that a commercial bank determines and can withstand;

4. Significant risk means various types of risks that occur and have an impact on business operations, depending on the form and nature of the commercial bank;

5. Senior management means members of the board of directors, committees of the board of directors, members of committees of the board of directors, the management board of the commercial bank, and the management board of a branch of a foreign commercial bank or equivalent positions.

Article ມາດຕາ 3

Article 4 Principles for Implementing the Capital Adequacy Assessment Process

In the capital adequacy assessment process, the following principles must be followed:

1. Ensure that commercial banks have a quality and standardized risk management system;

2. Be consistent with the business model, size, and complexity of products and services;

3. Ensure continuity and consistency with the internal procedures of the commercial bank;

4. Be forward-looking, taking into account possible changes according to risk characteristics and strategies, as well as changes in the external environment, consistent with the capital plan of the commercial bank;

5. Fully record and store information on the capital adequacy assessment process;

6. Establish a capital adequacy assessment process that reflects reality, is consistent with the existing capital level, and is sufficient to cover all risks of the commercial bank.

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