Front Matter Page
IMF Country Report No. 19/331
THE LAO PEOPLE’S DEMOCRATIC REPUBLIC
TECHNICAL ASSISTANCE REPORT—LAO PEOPLE’S DEMOCRATIC REPUBLIC—RISK-BASED BANKING SUPERVISION
October 2019
This Technical Assistance Report on the Lao People’s Democratic Republic was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in March 2019.
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Front Matter Page
INTERNATIONAL MONETARY FUND
Monetary and Capital Markets Department
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Risk-Based Banking Supervision
Hee Kyong Chon (MCM) with Joel Hefty and Richard Nun (External Experts)
October 2019
Contents
Glossary
Preface
Executive Summary
I. Background
A. Introduction
B. Progress Since the Last TA Mission in May 2018
II. Pace of RBS Tools Implementation
A. RBS Manual
B. IP and RAS
C. FSI Benchmarks
D. ROX
E. Training
III. The Supervisory Rating Framework (CAMELS)
IV. Selective Issues on Supervisory Process
A. Banking Sector Analysis
B. Annual Onsite Examination Schedules and Timeline
C. Supervisory Response
V. Next Steps
Tables
1. Mission’s Main Recommendations
2. The Last Mission’s Main Recommendations
Annexes
I. Detailed Observations on Systemic Reporting
II. Onsite Examination Timeframe
III. Sample Framework for Supervisory Response Policy
Glossary
| BoL |
Bank of the Lao P.D.R. |
| BSD |
Bank Supervision Department |
| CAMELS |
Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk |
| FIRST |
Financial Reform and Strengthening Initiative |
| FSI |
Financial Soundness Indicator |
| IP |
Institution Profile |
| LAK |
Lao kip |
| MCM |
IMF Monetary and Capital Markets Department |
| NPL |
Nonperforming Loan |
| RAS |
Risk Assessment Summary |
| RBS |
Risk-Based Supervision |
| ROX |
Report of Onsite Examination |
| SOCB |
State-Owned Commercial Bank |
| TA |
Technical Assistance |
Preface
The IMF’s Monetary and Capital Markets Department (MCM) technical assistance (TA) mission visited Vientiane, Lao People’s Democratic Republic (P.D.R.) during the period March 4–15, 2019, to assist the Bank of Lao (BoL) in enhancing its risk-based supervision (RBS). The mission comprised Hee Kyong Chon (MCM mission chief), Joel Hefty and Richard Nun (external experts). The mission was conducted within the framework of the TA program, being provided to the BoL to enhance RBS and strengthen capacity of the staff. The mission was financed by the Financial Reform and Strengthening Initiative (FIRST).1
The mission team held discussions with senior officials of the BoL and staff from the Banking Supervision Department (BSD). The mission team is grateful to BoL’s management, staff for their excellent cooperation, productive discussions, and warm hospitality, which greatly facilitated its work.
A TA project was approved in December 2015 with funding from the FIRST. For the tasks of the project, periodic TA missions assisted BoL in developing RBS framework during the period from 2016–2017. To maintain the commitment of BoL in enhancing RBS framework, a new TA project was approved in December 2017 with the FIRST funding as a Phase II project.
