Vietnamese banks are now required to maintain a minimum capital adequacy ratio of 8 percent under Circular 14/2025/TT-NHNN, which took effect on September 15, Vietnam News has reported → view source.
The regulation also sets out higher Common Equity Tier 1 and Tier 1 capital ratios, along with phased increases in capital buffers, moving the system closer to Basel III standards .
Key details:
- Capital requirements: CET1 must be at least 4.5 percent, Tier 1 capital 6 percent, and the CAR 8 percent, with consolidated ratios applied to banks with subsidiaries.
- Buffers: The Capital Conservation Buffer will rise from 0.625 percent in the first year to 2.5 percent from year four, pushing total CAR requirements up to 10.5 percent.
- Profit distribution: Banks can only pay out cash dividends once they fully meet the new ratios.
- Bank responses: Lenders have already been increasing charter capital via share issuance, retained earnings, or Tier 2 debt to comply. By June 2025, system-wide charter capital had reached VND 879.35 trillion, up 6.6 percent from end-2024, with the five largest banks holding 41 percent of the total .
On the surface this looks like Vietnam is seeking to reinforce its banking sector by adopting stricter capital standards in line with global norms.
However, the action taken through Circular 14/2025/TT-NHNN could constrain lending in the short term as banks shore up their balance sheets.
That is to say, this may be a way to stymie credit growth without touching interest rate or credit growth policy, which have sought to increase private lending to boost economic growth, but have done so at the cost of adding further strain to Vietnam’s debt profile
See also: It’s Time to Talk About Vietnam’s Credit Growth Policy…