Conditions for establishing transaction offices of commercial banks in Vietnam from August 15, 2024

Conditions for establishing transaction offices of commercial banks in Vietnam from August 15, 2024 (Image from the internet)

On June 30, 2024, the Governor of the State Bank of Vietnam issued Circular 32/2024/TT-NHNN regulating the operational network of commercial banks in Vietnam

Conditions for establishing transaction offices of commercial banks in Vietnam from August 15, 2024

According to Article 11 of Circular 32/2024/TT-NHNN, to establish a transaction office, a commercial bank in Vietnam must fulfill the following conditions:

- Conditions as stipulated in points a, b, c, d, dd, e, g, h, i, m clause 1 Article 6 of Circular 32/2024/TT-NHNN.

- In cases where the request is to establish a transaction office in a non-rural area, the commercial bank must be rated A or B according to the latest ranking results announced by the State Bank at the time of request and at the time of approval (except for organizations not subject to ranking as regulated by the State Bank's credit institution ranking regulations).

- The branch expected to manage the transaction office must meet the following conditions:

+ It must have been operational for at least 12 months from the date of inauguration to the time of request;

+ It must have a non-performing loan ratio as prescribed by the State Bank regarding asset classification at December 31 of the year preceding the application year and at the end of the month preceding the application month that does not exceed 3% or another rate as decided by the Governor of the State Bank from time to time;

+ It must not have been subject to administrative penalties in the monetary and banking field involving fines within the 12 months preceding the application time;

+ It must have had a positive income-expense balance in the year preceding the application year.

- Meeting the requirements on the number of transaction offices allowed to be established as stipulated in Articles 7 and 12 of Circular 32/2024/TT-NHNN.

Number of transaction offices that a commercial bank is allowed to establish in Vietnam

In addition to meeting the requirements on the total number of transaction offices as stipulated in Article 7 of Circular 32/2024/TT-NHNN, commercial banks must fulfill the following requirements:

- The number of transaction offices of a commercial bank in the inner districts of Hanoi and Ho Chi Minh City should not exceed twice the number of existing branches of the bank in each of these areas and should not exceed 20 transaction offices.

- The number of transaction offices of a commercial bank in each province or city directly under the Central Government should not exceed three times the number of existing branches of the bank in that province or city.

- In cases where the number of transaction offices established before August 15, 2024, exceeds the stipulated number above or equals the stipulated number at the application time, the commercial bank can establish up to two more transaction offices in rural areas in each province or city directly under the Central Government in each fiscal year. The total number of additional transaction offices established under this provision should not exceed the number of existing branches of the commercial bank in each province or city directly under the Central Government at the time of the application for establishment.

- A commercial bank that has been operational for 12 months or more from the date of inauguration to the application time is allowed to establish up to 10 transaction offices, with at least 50% of the transaction offices established in rural areas in each fiscal year.

- The number of transaction offices managed by a single branch is decided by the commercial bank itself based on the management capacity of each branch.

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