What are regulations on guarantee issued to customers that are non-residents in Vietnam?

What are regulations on guarantee issued to customers that are non-residents in Vietnam?

Pursuant to Article 12 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating guarantee issued to customers that are non-residents in Vietnam as follows:

1. Credit institutions and FBBs may only provide guarantee for organizations that are non-residents and must meet one of the following requirements (the customer that is a foreign credit institution shall not be required to meet these requirements):

a) The customer is an enterprise that is established and operating in a foreign country with capital contributed from Vietnamese enterprises in the form of investments prescribed in Points a, c Clause 1 Article 52 of the Investment Law or in other investment form prescribed in Point dd Clause 1 Article 52 of the Investment Law;

b) The customer has fully made a deposit equivalent to 100% of the guarantee value or has ensured 100% of the guarantee value by the customer’s assets, including the customer’s deposits at the credit institution or FBB issuing the guarantee, and deposit certificates issued by the same;

c) The obligee is a resident.

2. FBBs shall not be allowed to provide guarantee in foreign currency for organizations that are non-residents, unless the guarantee is provided on the basis of the counter guarantee of a foreign credit institution or guarantee confirmation in respect of guaranteed obligations of a foreign credit institution to the obligee that is a resident.

3. When giving guarantee in foreign currency to customers that are non-residents, credit institutions and FBBs shall:

a) comply with regulations of law regarding guidelines for foreign exchange management in overseas lending and collection of debts from provision of guarantee to non-residents;

b) has established procedures for credit risk assessment and management, including risks from provision of guarantee to non-residents.

4. In addition to the provisions of this Article, other contents about the provision of guarantee for customers that are non-residents shall comply with relevant provisions of this Circular.

When shall a commercial bank be considered to be capable of giving off-plan housing guarantee in Vietnam?

Pursuant to Clause 1 and 2, Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating as follows:

1. A commercial bank is considered to be capable of giving off-plan housing guarantee if:

a) Its license for establishment and operation, or the document stating amendments to this license includes bank guarantee operations;

b) It is not prohibited, restricted, or suspended from provision of off-plan housing guarantee.

2. The SBV shall publish the list of commercial banks capable of giving off-plan housing guarantee in each period on its web portal.

When shall a commercial bank consider giving guarantee to the investor in Vietnam?

Pursuant to Clause 3, Article 13 of the Circular 11/2022/TT-NHNN (takes effect from 01/04/2023) stipulating as follows:

3. The commercial bank shall consider giving guarantee to the investor if:

a) The investor has satisfied all of requirements in Article 11 of this Circular (except the cases where a commercial bank issues guarantee for the investor on the basis of a counter guarantee);

b) The investor's project has satisfied all of requirements for off-plan property to be put on the market as prescribed in Article 55 of the Law on Real Estate Business and relevant laws.

Best regards!