Vietnam: Financial regime applicable to credit institutions, branches of foreign banks

Principles of financial management

According to Decree No. 93/2017/NĐ-CP of Vietnam’s Government, credit institutions and branches of foreign banks exercising financial autonomy are responsible for their own operation, the fulfillment of their obligations and commitments as prescribed by law.

Credit institutions and branches of foreign banks shall conduct financial disclosures as prescribed by the Law on credit institutions and other related regulations.

Capital of credit institutions, branches of foreign banks includes equity, raised capital and other kinds of capitals as prescribed by law. In which, equity includes: charter capital or financed capital; differences from re-assessment of assets and differences due to the foreign exchange rate; share premium; funds (reserve fund for charter capital addition, fund for investment in development, financial reserve fund); undistributed accumulated profits, unrealized accumulated losses; other capital owned by credit institutions, branches of foreign banks.

Raised capital includes: capital from deposit of organizations and individuals; capital from the issuance of valuable papers; capital from investment authorization; loan from domestic and foreign credit institutions and financial institutions; loan from the State bank of Vietnam.

Branches of foreign banks and credit institutions are entitled to use their capital for business according to the Law on credit institutions and other related regulations on the principles of capital growth and adequacy.

Branches of foreign banks and credit institutions are entitled to change the structure of their capital and assets serving the business development according to the provisions of law.

Credit institutions are entitled to buy and invest on fixed assets in direct serve of business operation on the principle that the remaining value of the fixed assets does not exceed 50% of the charter capital and reserve fund for charter capital addition.

Revenue

Revenues from the business of branches of foreign banks and credit institutions include:

1- Interest income and similar income: deposit interest, loan interest, business interest, interest receivable from securities investment, income from guarantee operations, interest from finance lease, interest from debt trading, other income from credit activities;

2- Income from service activities: income from payment services; income from treasury operations; income from entrustment and agent operations; income from other services;

3- Incomes from trading foreign currency and gold: Income from foreign currency trading; income from foreign exchange differences; income from gold trading; income from currency derivatives;

4- Income from securities trading activities (excluding stocks);

5- Income from capital contribution, transfer of stake and shares;

6- Incomes from other activities: income from the loans handled by risk reserve (including the debts that have been written off, now recovered); income from other derivative financial instruments; income from debt trading; income from transfer, liquidation of assets; income from reversal of provision for fall of long-term investment; income from other activities as prescribed by law;

7- Other incomes as prescribed by law.

1. The amounts receivable of credit institutions and branches of foreign banks must be determined in accordance with accounting standards and relevant law provisions with eligible documentary evidence and be included in revenues.

Source: Vietnam Financial Times Online

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