Are commercial banks in Vietnam allowed to conduct insurance business by themselves?
Are commercial banks in Vietnam allowed to conduct insurance business by themselves?
According to the provisions of Clause 2, Article 103 of the 2010 Law on Credit Institutions in Vietnam stipulating as follows:
Commercial banks shall establish or acquire subsidiaries or affiliated companies to conduct the following business activities:
- Securities issue underwriting, and securities brokerage; management and distribution of securities investment fund certificates; and securities investment portfolio management and stock trading;
- Financial leasing;
- Insurance.
Thus, commercial banks will not be allowed to do insurance business on their own, but must establish or acquire subsidiaries and affiliated companies to conduct this business.
Are commercial banks in Vietnam allowed to conduct insurance business by themselves?
Are commercial banks allowed to purchase shares of insurance enterprises?
According to the provisions of Clause 4, Article 103 of the 2010 Law on Credit Institutions in Vietnam:
Capital contribution and share purchase
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4. Commercial banks may contribute capital to, or purchase shares from, enterprises operating in the following areas:
a/ Insurance, securities, local currency exchange for overseas Vietnamese, foreign exchange trading, gold trading, factoring, issue of credit cards, consumer cards, intermediary payment services and credit information;
b/ Other areas not specified at Point a of this Clause.
5. The establishment and acquisition of subsidiaries or affiliated companies specified in Clauses 2 and 3 of this Article and the capital contribution and share purchase by commercial banks specified at Point b, Clause 4 of this Article are subject to the State Bank's prior written approval. The State Bank shall specify the conditions, dossiers, order and procedures for approval.
The conditions, procedures and order for establishing subsidiaries and affiliated companies of commercial banks comply with relevant laws.
6. Commercial banks and their subsidiaries may acquire or hold shares of other credit institutions on the conditions and within the limits provided by the State Bank.
Thus, according to the above provisions, commercial banks are allowed to purchase shares of insurance enterprises.
What operations can commercial banks perform?
According to the provisions of Section 2 of the 2010 Law on Credit Institutions in Vietnam:
Commercial banks may perform the following operations:
- Banking operations according to the provisions of Article 98 of the 2010 Law on Credit Institutions in Vietnam, including:
+ Taking demand deposits, time deposits, savings deposits and deposits of other types.
+ Issuing deposit certificates, promissory notes, treasury bills and bonds to raise capital at home and aboard.
+ Extending credit.
+ Opening payment accounts for clients.
+ Providing payment instruments.
+ Providing the following payment services
- Borrowing of loans from the State Bank according to the provisions of Article 99 of the 2010 Law on Credit Institutions in Vietnam
- Borrowing of loans from credit institutions and financial institutions as prescribed in Article 100 of the 2010 Law on Credit Institutions in Vietnam
- Opening of accounts according to the provisions of Article 101 of the 2010 Law on Credit Institutions in Vietnam
- Organization of and participation in payment systems as prescribed in Article 102 of the 2010 Law on Credit Institutions in Vietnam
- Capital contribution and share purchase according to the provisions of Article 103 of the 2010 Law on Credit Institutions in Vietnam
- Participation in the monetary market according to the provisions of Article 104 of the 2010 Law on Credit Institutions in Vietnam
- Dealing in and provision of foreign exchange services and derivative products as prescribed in Article 105 of the 2010 Law on Credit Institutions in Vietnam
- Entrustment and agency
- Other business activities of commercial banks
+ Provision of such services as cash management, banking and financial consultancy, asset management and preservation, and safe keeping.
+ Consultancy of corporate finance, business acquisition, sale, consolidation and merger and investment.
+ Trading in government bonds and corporate bonds.
+ Monetary brokerage services.
+ Securities depository, gold trading and other business activities related to banking operations after obtaining the State Bank's written approval.
How many years is the maximum period of operation of a commercial bank?
According to the provisions of Clause 1, Article 22 of Circular No. 40/2011/TT-NHNN on this content as follows:
Period of operation, change of period of operation
1. Operation period of a commercial bank, foreign bank’s branch as prescribed in the License shall be no more than 99 years; operation period of a representative office shall be no more than 5 years.
Thus, commercial banks are allowed to operate banking for a maximum of 99 years.
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