Conditions for Capital Contribution to Establish, Acquire a Subsidiary of a Credit Institution

According to regulations, a credit institution that wishes to contribute capital, purchase shares to establish or acquire a subsidiary under points a, c clause 1 Article 1 of Circular 51/2018/TT-NHNN must meet the following conditions:

- The license for establishment and operation of the credit institution must include activities of capital contribution and share purchase;- Ensure the minimum capital safety ratio for 24 consecutive months prior to the request month and at the time of completing the capital contribution and share purchase;- Ensure the ratio of capital contribution and share purchase for 24 consecutive months prior to the request month and at the time of completing the capital contribution and share purchase;- The actual value of the charter capital at the time of completing the capital contribution and share purchase must not be lower than the legal capital level;- The business operation results must be profitable according to the audited financial report of the year immediately preceding the request year by an independent audit organization;- Not be subject to administrative penalties for debt classification, provisioning, and use for risk handling, capital contribution, or share purchase in 12 consecutive months prior to the request month;- Maintain a non-performing loan ratio to total loans of less than 3% in 12 consecutive months prior to the request month;- Have an organizational structure, Board of Directors, Members' Council, Supervisory Board, and General Director in accordance with the Law on Credit Institutions and the regulations of the State Bank of Vietnam (NHNN).

More details can be found in Circular 51/2018/TT-NHNN effective from March 1, 2019.

- Thanh Lam -

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