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Financial Mission Report: Enhancing Offsite Supervision, Data Quality, and Performance Ranges at Bank of Lao PDR

Offsite Supervision

The financial mission to the Bank of Lao PDR (BoL) aimed to provide recommendations on offsite supervision, data quality, and performance ranges. One key area of focus was offsite supervision, which involves monitoring banks’ internal policies and risk assessment systems.

Review of Internal Policy and Risk Assessment System Documents

  • The mission reviewed IP (Internal Policy) and RAS (Risk Assessment System) documents for one commercial bank and one foreign branch.
  • Progress is noted, but some streamlining is needed along with additional practice and coaching.

Recommendations for Offsite Supervision

  • Implement revised RAS and IP format for all banks starting from 2019:3Q.
  • Evaluate and supervise multiple branches of the same bank as a group preparing one IP, one RAS, and one ROX.

Data Quality and Performance Ranges

The mission identified two key areas that require attention to improve data quality and performance ranges:

Data Issues

  • Additional attention should be given to liquidity measures.
  • Calculation and monitoring of the total net open position in foreign currencies need clarification.

Recommendations for Data Quality and Performance Ranges

  • Enhance liquidity indicators presented in RAS; clarify calculation of total net open position in FX to capital ratio.

Systemic Report

The mission also provided feedback on the systemic report drafted by offsite supervisors, which aims to provide a comprehensive overview of the banking system to senior management of the BoL:

Feedback and Recommendations

  • The mission welcomed discussions about the report and appreciated the opportunity to see graphic illustrations of some data provided.
  • Present additional important indicators of institutional and systemic liquidity that the BoL calculates and monitors.

Overall Recommendations

The financial mission provided recommendations to enhance offsite supervision, improve data quality, and strengthen the systemic report. By implementing these recommendations, the Bank of Lao PDR can further develop its supervisory framework and ensure a more stable and resilient banking system.