Which operations are foreign bank branches in Vietnam not allowed to conduct under the Law on Credit Institutions 2024?
- Which operations are foreign bank branches in Vietnam not allowed to conduct under the Law on Credit Institutions 2024?
- Vietnam: When does the early intervention in a credit institution/foreign bank’s branch shall be terminated?
- What are the restriction measures applicable to credit institutions or foreign bank branches subject to early intervention in Vietnam?
- Vietnam: When does the latest Law on Credit Institutions 2024 comes into force?
Which operations are foreign bank branches in Vietnam not allowed to conduct under the Law on Credit Institutions 2024?
Pursuant to the provisions of Article 131 of the Law on Credit Institutions 2024, foreign bank branches are not allowed to conduct following operations:
- Operations specified in Article 111 of the Law on Credit Institutions 2024
Capital contribution and share purchase
1. Each commercial bank may only use its charter capital and reserve fund to contribute capital or purchase shares under Clauses 2, 3, 4 and 8 of this Article.
2. Commercial banks shall establish or acquire subsidiaries or associate companies to conduct the following business activities:
a) Securities underwriting and securities brokerage; management and distribution of securities investment fund certificates; and securities investment portfolio management and stock trade;
b) Financial leasing;
c) Insurance.
3. Commercial banks may establish or acquire subsidiaries or associate companies operating in fields, including management of debts and utilization of assets, remittance, gold trade, factoring, and issuance of credit cards, consumer credit, intermediary payment services and credit information.
4. Commercial banks may contribute capital to, or purchase shares from, enterprises operating in the following fields:
a) Insurance, securities, remittance, gold trade, factoring, issuance of credit cards, consumer credit, intermediary payment services and credit information;
b) Other fields other than those specified at Point a of this Clause after obtainment of the written approval from the State Bank.
5. Commercial banks shall establish or acquire subsidiaries or associate companies according to regulations in Clause 2 and Clause 3 of this Article after obtaining written approval from the State Bank.
6. The Governor of State Bank shall provide for requirements, documents, and procedures for approval for establishment and acquisition of subsidiaries or associate companies, capital contribution and share purchase by commercial banks; conditions for increase in capital at subsidiaries or associate companies of commercial banks; operations of subsidiaries or associate companies of commercial banks in the fields of management of debts and utilization of assets.
7. Commercial banks shall establish subsidiaries or associate companies according to regulations of this Law and other relevant laws.
8. Commercial banks and their subsidiaries may purchase or hold shares of other credit institutions under conditions and within the limits provided by the Governor of State Bank.
- Operations not permitted to be conducted by the parent bank of foreign bank branches in the country where it is headquartered.
Which operations are foreign bank branches in Vietnam not allowed to conduct under the Law on Credit Institutions 2024? (Image from the Internet)
Vietnam: When does the early intervention in a credit institution/foreign bank’s branch shall be terminated?
Pursuant to the provisions of Article 161 of the Law on Credit Institutions 2024, there are cases of termination of early intervention as follows:
Early intervention in a credit institution shall be terminated in the following cases:
- The State Bank issues a document on termination of the compliance with the written request specified in Clause 2, Article 156 of the Law on Credit Institutions 2024 when the credit institution has recovered from the situation that leads to early intervention as specified in Clause 1, Article 156 of the Law on Credit Institutions 2024 and sends a written report to the State Bank;
- The State Bank gives a written approval for its merger or amalgamation with other credit institutions as specified in Article 201 of the Law on Credit Institutions 2024;
- A competent state authority issues a decision to dissolve or bankrupt the credit institution in accordance with regulations of law;
- The State Bank issues a decision to place the credit institution under special control specified in Article 162 of the Law on Credit Institutions 2024.
Early intervention in a foreign bank’s branch shall be terminated in the following cases:
- The State Bank issues a document on termination of the compliance with the written request specified in Clause 2, Article 156 of the Law on Credit Institutions 2024 when the foreign bank’s branch has recovered from the situation that leads to early intervention as specified in Clause 1, Article 156 of the Law on Credit Institutions 2024, and sends a written report to the State Bank;
- The State Bank issues a written approval for dissolution of the foreign bank’s branch or termination of its operations in accordance with regulations of law.
What are the restriction measures applicable to credit institutions or foreign bank branches subject to early intervention in Vietnam?
Pursuant to the provisions of Clause 2, Article 157 of the Law on Credit Institutions 2024, the credit institution or foreign bank’s branch subject to early intervention shall adopt the following restriction measures:
- Not paying dividends, profits, or distributing after-tax profits after making deductions to set up funds or transferring profits to the country; restricting the transfer of shares, stakes and assets;
- Restricting ineffective and high-risk business activities; reducing the limits of credit extension, capital contribution and share purchase; and restricting credit growth;
- Terminating or suspending one or several banking operations or other business activities that show signs of violations against the law; not adding banking operations or other new business activities, and not expanding the operating network;
- Suspending managers and operators who violate the law or pose major risks to operations of the credit institution or foreign bank’s branch; recommending the election or appointment for replacement of managers and executives who violate the law or pose major risks to operations of the credit institution or foreign bank’s branch subject to early intervention;
- Adopting other measures within the jurisdiction of the State Bank.
Vietnam: When does the latest Law on Credit Institutions 2024 comes into force?
In the newly officially promulgated Law on Credit Institutions 2024, Article 209 of the Law on Credit Institutions 2024 stipulates:
The Law on Credit Institutions 2024 comes into force from July 1, 2024, except for Clause 3, Article 200 and Clause 15, Article 210 of the Law on Credit Institutions 2024, come into force from January 1, 2025.
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