What are conditions for issuance of a License for a foreign bank branch in Vietnam?
What are conditions for issuance of a License for a foreign bank branch in Vietnam?
According to Clause 3, Article 29 of the Law on Credit Institutions 2024, the conditions for issuance of a License are stipulated as follows:
Article 29. Conditions for granting a License
[...]
- A foreign bank branch can be granted a License when it fully meets the following conditions:
a) Has a minimum granted capital equal to the statutory capital level;
b) Meets the conditions stipulated at Points b, c, and đ of Clause 1, and Points b, c, d, and e of Clause 2 of this Article;
c) The foreign bank must have a document ensuring it assumes responsibility for all obligations and commitments of the foreign bank branch in Vietnam; ensures the real value of the granted capital is maintained not lower than the statutory capital level, and fulfills the regulations on restrictions to ensure operational safety as stipulated by this Law;
d) In the case of applying to establish the second or more foreign bank branches in Vietnam, the foreign bank must ensure that the existing foreign bank branches operating in Vietnam for 3 consecutive years preceding the year of the application have not violated legal regulations, safety ratios, and have profitable business results.
[...]
Thus, the conditions for issuance of a License to a foreign bank branch are as follows:
- The foreign bank branch has a minimum granted capital equal to the statutory capital level
- The owner of the credit institution is a single-member limited liability company, the founding shareholder, or founding member is a legal entity legally operating and has sufficient financial capacity to contribute capital; the founding shareholder, founding member is an individual with full civil act capacity and has a commitment to have sufficient financial capability to contribute capital
- The management, executives, and members of the Board of Controllers meet the required standards and conditions
- A feasible establishment scheme and business plan that ensures it does not affect the safety and stability of the credit institution system, and does not create a monopoly or restrict competition or engage in unfair competition within the credit institution system
- The foreign credit institution is permitted to conduct banking activities according to the law of the country where the foreign credit institution is headquartered
- The proposed activities in Vietnam must be those that the foreign credit institution is allowed to conduct in its home country
- The foreign credit institution meets the conditions on total assets and financial status as stipulated by the Governor of the State Bank, and complies with the regulations on ensuring operational safety according to the laws of the country where the foreign credit institution is headquartered
- The competent authority of the home country of the foreign credit institution has signed an agreement with the State Bank on banking activity inspection and supervision, exchange of information on banking safety supervision, and has a declaration of commitment to consolidated supervision according to international practices for the activities of the foreign credit institution
- The foreign bank must have a document ensuring responsibility for all obligations and commitments of the foreign bank branch in Vietnam; ensure the real value of the granted capital is maintained not lower than the statutory capital level, and fulfill the regulations on restrictions to ensure operational safety as stipulated
- In the case of applying to establish the second or more foreign bank branches in Vietnam, the foreign bank must ensure that the existing foreign bank branches operating in Vietnam for 3 consecutive years preceding the year of the application have not violated legal regulations, safety ratios, and have profitable business results.
What are conditions for issuance of a License for a foreign bank branch in Vietnam? (Image from the Internet)
What is the time limit for issuing a License for a foreign bank branch in Vietnam?
According to Article 31 of the Law on Credit Institutions 2024, the time limit for issuing a License is stipulated as follows:
Article 31. Time limit for issuing a License
1. Within 180 days from the date of receiving a complete valid dossier, the State Bank shall grant or refuse to grant a License for the establishment and operation of a credit institution, or a License for establishing a foreign bank branch.
- Within 60 days from the date of receiving a complete valid dossier, the State Bank shall grant or refuse to grant a License for establishing a foreign representative office.
- In cases of refusal to grant a License, the State Bank must notify in writing and clearly state the reasons.
According to the above regulations, the time limit for issuing a License for a foreign bank branch is 180 days from the date of receiving a complete valid dossier.
When can a foreign bank branch in Vietnam commence operations?
According to Article 34 of the Law on Credit Institutions 2024, the conditions for commencing operations are stipulated as follows:
Article 34. Conditions for commencing operations
- A credit institution, foreign bank branch, or foreign representative office granted a License is only allowed to operate from the date of commencement of activities.
2. To commence operations, a credit institution or foreign bank branch granted a License must meet the following conditions:
a) Has submitted to the State Bank the Charter approved by the competent authority of the licensed credit institution;
b) Has sufficient charter capital, granted capital; has a cash vault, headquarters meeting the conditions as stipulated by the Governor of the State Bank;
c) Has an organizational management structure, internal control system, and internal audit appropriate to the type of activities as stipulated by this Law and related legal regulations;
d) Has an information technology system meeting management and operational scale requirements;
[...]
According to the above regulations, a foreign bank branch can commence operations from the date of being granted a License and must meet the following conditions:
- Has submitted to the State Bank the Charter approved by the competent authority of the licensed credit institution;
- Has sufficient charter capital and granted capital; has a cash vault and headquarters meeting the conditions as stipulated by the Governor of the State Bank;
- Has an organizational management structure, internal control system, and internal audit appropriate to the type of activities as stipulated by this Law and related legal regulations;
- Has an information technology system meeting management and operational scale requirements;
- Has internal regulations governing the organization and operation of Boards of Directors, Members' Councils, Control Boards, General Directors (Directors), and professional departments at the headquarters; internal regulations on risk management; regulations on managing the operational network;
- Charter capital, granted capital in Vietnamese dong must be fully deposited in a blocked account not earning interest at the State Bank at least 30 days prior to the commencement of operations. Charter capital, granted capital is unblocked when the credit institution, foreign bank branch has commenced operations;
- Has published information about the commencement of operations.
