Vietnam: Can banks go bankrupt? Can savers withdraw money when the bank goes bankrupt?
Can banks go bankrupt in Vietnam?
In fact, in Vietnam today, no bank has gone bankrupt. It is quite difficult for a bank to go bankrupt because when the commercial bank does not perform win Vietnamell, the State Bank will direct many measures to save it. At the same time, bankruptcy procedures are also relatively complicated with many recovery measures.
However, our country allows banks and credit institutions to request the Court to declare bankruptcy. Bankruptcy is the insolvency of an enterprise and being declared bankrupt by the Court.
Accordingly, a bank can be considered bankrupt when it falls into a state of insolvency, unable to fulfill its financial obligations to customers.
Article 155 of the Law on Credit Institutions 2010 (this article is supplemented by Clause 29, Article 1 of the Law on Credit Institutions amended in 2017) specifies as follows:
- After the State Bank issues a document on termination of special control or a document on the termination or non-application of solvency restoration measures, if the credit institution remains in the state of bankruptcy, it shall file a request for a court to open procedures for settlement of bankruptcy declaration requests under the bankruptcy law.
- Upon receiving a request for opening bankruptcy procedures for a credit institution as prescribed in Clause 1 of this Article, the court shall open procedures for settlement of bankruptcy declaration requests and immediately apply procedures for liquidating the credit institution's assets under the bankruptcy law.
- After the judge appoints an official receiver or an enterprise responsible for management and liquidation of the assets, the State bank shall revoke the license of the credit institution.
Vietnam: Can banks go bankrupt? Can savers withdraw money when the bank goes bankrupt?
Bank goes bankrupt, can savers withdraw money in Vietnam?
In case the bank goes bankrupt, the depositor may not be able to withdraw all the money he has deposited, but only receive a compensation insurance amount.
According to the provisions of Article 6 of the Law on Deposit Insurance 2012, banks receiving deposits of individuals must participate in deposit insurance, except for policy banks.
Article 4 of the Law on Deposit Insurance 2012 explains as follows:
1. Deposit Insurance is a guarantee for repayment of deposits to the insured persons of deposit within the limit of premium payment when the deposit insurance participating organizations fall into the state of inability to repay deposits to the depositors or go bankrupt.
2. Insured persons of deposit is an individual having deposits insured at the deposit insurance participation organizations
3. Deposit insurance participating organizations are foreign credit organizations and banking branches established and operating under the Law on credit organizations are entitled to receive deposits of individuals.
4. Deposit insurance organizations are the state financial organizations operating not for profit, implementing the deposit insurance policies, thus contributing to maintain the stability of the system of credit organizations and ensuring the safe and healthy development of the banking operation.
5. Deposit insurance fee is an amount that the deposit insurance participating organizations must pay the deposit insurance organizations for the insurance of deposits of the insured persons of deposit at the deposit insurance participation.
According to Decision 32/2021/QD-TTg, the maximum amount paid by a deposit insurance organization for all deposits insured in accordance with the Law on Deposit Insurance (including principal and interest) of a person at an organization participating in deposit insurance when the obligation to pay insurance is incurred is VND 125,000,000 (one hundred and twenty-five million VND).
Accordingly, if the bank goes bankrupt, depositors will be covered by insurance up to VND 125 million.
In addition to receiving insurance money, depositors can also receive compensation from the liquidation of assets of the bankrupt bank.
How to minimize the risk of losing money in Vietnam?
- Should choose large and reputable banks to deposit savings
- Customers should choose the appropriate deposit term
- Customers need to keep a safe passbook
Above is some of the information we provide to you. Best regard!
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