What are the cases of termination of early intervention in a credit institution and a foreign bank branch in Vietnam?

What are the cases of termination of early intervention in a credit institution and a foreign bank branch in Vietnam? (Internet image)

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

1. What are the cases of termination of early intervention in a credit institution and a foreign bank branch in Vietnam?

Pursuant to Article 161 of the Law on Credit Institutions 2024, regulations on termination of early intervention in a credit institution and a foreign bank branch in Vietnam are 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.

2. What are cases of early intervention in credit institutions in Vietnam? 

According to Clause 1, Article 156 of the Law on Credit Institutions 2024, in any of the following cases, the State Bank will consider deciding to make early intervention in a credit institution or foreign bank's branch in Vietnam:

- The accumulated losses incurred by the credit institution or foreign bank's branch exceeds 15% of its charter capital, provided capital and reserve funds written in the latest financial statement which has been audited or according to audit and inspection conclusions of the competent authority and the credit institution or foreign bank's branch commits violations against law regulations on capital adequacy ratio specified at Point b, Clause 1, Article 138 of the Law on Credit Institutions 2024;.

- The credit institution or foreign bank's branch is ranked below average under regulations of the Governor of the State Bank;

- The credit institution or foreign bank's branch fails to achieve the minimum solvency ratio specified in Point a Clause 1 Article 138 of the Law on Credit Institutions 2024 for 30 consecutive days;

- The credit institution or foreign bank's branch fails to achieve the minimum capital adequacy ratio specified in Point b Clause 1 Article 138 of the Law on Credit Institutions 2024 for 06 consecutive months;

- A bank run occurs and the credit institution or foreign bank's branch sends a report to the State Bank.

The Law on Credit Institutions 2024 takes effect on July 1, 2024, except for the provisions in Clause 3, Article 200 and Clause 15, Article 210 of the Law on Credit Institutions 2024, which takes effect on January 1, 2024. January 2025.

Nguyen Ngoc Que Anh

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