Amendments to procedures for granting a Joint Stock Commercial Bank Establishment License in Vietnam

What are the amendments to procedures for granting a Joint Stock Commercial Bank Establishment License in Vietnam? - Minh Quan (Phu Yen)

Amendments to procedures for granting a Joint Stock Commercial Bank Establishment License in Vietnam

Amendments to procedures for granting a Joint Stock Commercial Bank Establishment License in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

On November 24, 2023, the State Bank of Vietnam issued Decision 2183/QD-NHNN on the announcement of amended and supplemented administrative procedures in the field of establishment and banking operations carried out at the Single-Window Department within the scope of management functions of the State Bank of Vietnam.

Amendments to procedures for granting a Joint Stock Commercial Bank Establishment License in Vietnam

1. Implementation sequence

- Step 1: The Preparatory Committee sends directly or by post to the State Bank the application for a License prepared in accordance with the provisions of Circular 40/2011/TT-NHNN.

- Step 2: Within 60 days from the date of receiving the application for a License, the State Bank shall send a document to the Preparatory Committee confirming receipt of all valid documents for in-principle approval. In case the application dossier for a License is incomplete, the State Bank shall send a document to the Preparatory Committee requesting that it supplement and complete the dossier according to regulations.

- Step 3: Within 90 days from the date of sending the document confirming receipt of all valid documents, the State Bank shall issue a document approving the principles of establishing a commercial bank or foreign bank branch. In cases of disapproval, the State Bank will send a written response to the Preparatory Committee, clearly stating the reasons for disapproval.

- Step 4: Within 60 days from the date of receiving the in-principle approval document for establishing a commercial bank or foreign bank branch,
The Preparatory Committee sends directly or by post to the State Bank additional documents specified in Circular 40/2011/TT-NHNN.

- Step 5: Within 02 days from the date of receiving all additional documents, the State Bank confirms in writing the receipt of all documents.

- Step 6: Within 30 days from the date of receiving all additional documents, the State Bank shall issue the License according to regulations. In case the License is not granted, the State Bank shall send a written response to the Preparatory Committee, clearly stating the reasons for not granting the License.

2. Application

- Application for a License to establish and operate a commercial bank by founding shareholders, owners, and founding members.

- Draft Charter.

- Project to establish a commercial bank.

- Documents proving the capacity of the expected management, control, and operating apparatus.

- Minutes of the meeting of the founding shareholders, founding members, or documents of the owner on the selection of the Preparatory Committee, Head of the Preparatory Committee, approval of the draft Charter, and project to establish the bank
and a list of expected management, control, and executive positions.

- List of founding shareholders and expected list of founding shareholders.

- Profile of shareholders contributing capital to establish.

3. Requirements and conditions for implementing administrative procedures

- Have charter capital and allocated capital at least equal to the legal capital level;

- Managers, executives, and members of the Supervisory Board meet all standards and conditions as prescribed in Article 50 of the Law on Credit Institutions;

- Have a charter consistent with the provisions of the Law on Credit Institutions and other relevant legal provisions;

- Have a feasible establishment project and business plan that does not affect the safety and stability of the credit institution system; Do not create a monopoly or restrict competition or unfair competition in the credit institution system.

- Conditions for founding shareholders:

(1) Not a founding shareholder, owner, founding member, or strategic shareholder of another credit institution;

(2) Founding shareholders must together own at least 50% of charter capital when establishing a joint stock commercial bank,
in which the founding shareholders who are legal entities must together own at least 50% of the total shares of the founding shareholders:

(3) In addition to the conditions specified in points (1), (2), founding shareholders who are individuals must meet the following conditions:

(i) Hold Vietnamese nationality;

(ii) Do not belong to the prohibited subjects according to the provisions of the Law on Enterprises;

(iii) Do not use mobilized capital or loan capital from organizations or individuals to contribute capital;

(iv) Be a manager of a profitable business enterprise for at least 03 years immediately preceding the year of submitting the application for License or have a university or postgraduate degree in economics or law.

(4) In addition to the conditions specified in points (1), (2) above, founding shareholders who are organizations must meet the following conditions:

(i) Be Established under Vietnamese law;

(ii) Do not use capital mobilized or borrowed from other organizations or individuals to contribute capital;

(iii) Fulfill all tax and social insurance obligations according to regulations up to the time of submitting the application for a License;

(iv) Have equity capital of at least 500 billion VND for 5 years immediately preceding the year of submitting the application for License;

(v) Profitable business for 5 years immediately preceding the year of submitting the application for License.

(vi) In case the enterprise operates in a business line that requires legal capital, it must ensure that the owner's capital minus the legal capital is at least equal to the committed capital contribution amount according to data from the audited financial statements of the year immediately preceding the time of submitting the application for a License;

(vii) In case of a State-owned enterprise, there must be written approval from a competent authority to contribute capital to establish a joint stock commercial bank in accordance with the provisions of law;

(viii) In case of an organization licensed to establish and operate in the fields of banking, securities, and insurance, it must comply with capital contributions according to relevant provisions of law;

(ix) In case of commercial banks:

- Have total assets of at least 100,000 billion VND, fully comply with regulations on risk management, and provide full provisioning as prescribed at the time of submitting the application for a License until the time of issuance of the License. permission;

- Do not violate the ratios to ensure safety in banking operations according to the regulations of the State Bank in the year immediately preceding the year of submitting the application for License and up to the time of License issuance;

- Comply with the conditions and limits on purchasing and holding shares of credit institutions as prescribed in Clause 6, Article 103 of the Law on Credit Institutions;

- Ensure the minimum capital safety ratio after contributing capital to establish a joint-stock commercial bank.

Nguyen Ngoc Que Anh

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