In what cases shall the special control status be terminated for credit institutions in Vietnam?
Are credit institutions placed under special control eligible for supporting loans?
Pursuant to Article 151 of the 2010 Law on Credit Institutions of Vietnam (amended and supplemented by Clause 27, Article 1 of the 2017 Law on amendments to some articles of the Law on Credit Institutions of Vietnam) on special loan support for credit institutions which become insolvent to pay as follows:
Special loans
1. A credit institution placed under special control will be granted a special loan by the State bank, Deposit Insurance of Vietnam, Cooperative Bank of Vietnam and other credit institutions in the following cases:
a) The credit institution is facing insolvency or has become insolvent and such insolvency threatens the stability of the system while the credit institution is placed under special control, even if the credit institution is implementing the approved restructuring plan;
b) The loan is used according to the recovery plan or mandatory transfer plan approved.
2. The special loan must be repaid before every other debts, including debts secured by collateral of the credit institution in the following cases:
a) When the loan is due, unless the restructuring plan or adjustments thereto is not approved;
b) The credit institution is dissolved or goes bankrupt.
3. The State bank shall specify the grant of special loans to credit institutions placed under special control.
At the same time, Point a, Clause 1, Article 4 of Circular 08/2021/TT-NHNN of Vietnam stipulates cases in which a special loan shall be granted for credit institutions placed under special control as follows:
- The State Bank of Vietnam, Deposit Insurance of Vietnam, or Cooperative Bank of Vietnam shall grant a special loan for supporting the liquidity of a credit institution that is in danger of becoming insolvent or has become insolvent and such insolvency threatens the stability of the banking system while the credit institution is placed under special control, even if the credit institution is implementing an approved restructuring plan or transfer plan.
Thus, based on the above provisions, a credit institution placed under special control that is in danger of becoming insolvent or has become insolvent will be entitled to supporting special loans with special preferential interest rates by the State Bank of Vietnam, Deposit Insurance of Vietnam, or Cooperative Bank of Vietnam.
In what cases shall the special control status be terminated for credit institutions in Vietnam?
In what cases shall the special control status be terminated for credit institutions in Vietnam?
Pursuant to Article 152 of the 2010 Law on Credit Institutions of Vietnam stipulating as follows:
Termination of special control
1. The State Bank shall terminate the special control placed over a credit institution in the following cases:
a/ The credit institution resumes its normal operation:
b/ The credit institution has been merged or consolidated with another credit institution during the special control;
c/ The credit institution is unable to restore its solvency.
2. The decision on termination of special control shall be notified to all concerned organizations and individuals.
3. In case of terminating special control under Point c, Clause 1 of this Article, the State Bank shall send to the court a document on the termination of solvency restoration measures.
According to the above regulations, the State Bank shall terminate the special control placed over a credit institution in the following cases:
- The credit institution resumes its normal operation:
- The credit institution has been merged or consolidated with another credit institution during the special control;
- The credit institution is unable to restore its solvency.
What are the tasks and powers of special control boards in Vietnam?
Pursuant to Article 148 of the 2010 Law on Credit Institutions of Vietnam stipulating as follows:
Tasks and powers of special control boards in Vietnam
1. A Special Control Board has the following tasks:
a/ To direct the Board of Directors, Members' Council, Control Board, Director General (Director) or holders of equivalent posts in the credit institution placed under special control to formulate a plan to consolidate its organization and operation;
b/ To direct and supervise the implementation of solutions stated in the plan on organizational and operational consolidation approved by the Special Control Board;
c/ To report to the State Bank on the operation of the credit institution and the results of implementation of the plan on organizational and operational consolidation.
2. A Special Control Board has the following powers:
a/ To terminate operations unconformable with the approved plan on organizational and operational consolidation or contrary to regulations on safety in banking operations which may harm the interests of depositors;
b/ To terminate or suspend the right to govern, administer and control the credit institution of members of the Board of Directors, Members' Council. Control Board, the Director General (Director), or Deputy Director General (Deputy Director), when necessary;
c/ To request the Board of Directors, Members' Council, Director General (Director) to dismiss or suspend the work of a person who commits violations of law or fails to abide by the approved plan on organizational and operational consolidation.
d/ To propose the State Bank to extend or terminate the special control, provide or terminate special loans for the credit institution, purchase shares of the credit institution, liquidate the credit institution or revoke its license, or compulsorily receive, merge, consolidate or acquire the credit institution;
e/ To request the credit institution to file request for a court to open bankruptcy procedures under the bankruptcy law.
3. The Special Control Board shall take responsibility for its decisions when conducting the special control.
Thus, the special control boards in Vietnam will have the tasks and powers as prescribed above.
LawNet
