Application for a License to establish a joint venture bank or a bank with 100% foreign capital in Vietnam

Application for a License to establish a joint venture bank or a bank with 100% foreign capital in Vietnam (Internet image)

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

Application for a License to establish a joint venture bank or a bank with 100% foreign capital in Vietnam

Dossier to request a License to establish a joint venture bank or a bank with 100% foreign capital is guided by Decision 2183/QD-NHNN in 2023, including:

(1) Application for a License to establish and operate a commercial bank signed by founding shareholders, owners, and founding members according to the form specified in Appendix 02a of Circular 13/2023/TT-NHNN.

(2) Draft Charter.

(3) Project to establish a commercial bank, including at least the following contents:

- The need to establish commercial banks;

- Name of commercial bank; name of province/centrally run city where head office is expected to be located; operating time; charter capital when established; content of operations;

- Financial capacity of founding shareholders and capital contributing members;

- Organization chart and expected operational network of the bank in the first 03 years;

- List of expected personnel detailing professional qualifications and work experience in the fields of finance, banking, and risk management to meet the requirements of each position and title:

(i) Chairman, member, or independent member of the Board of Directors and Board of Members; Head of Committees under the Board of Directors and Board of Members;

(ii) Head, member, or full-time member of the Supervisory Board;

(iii) General Director (Director), Deputy General Directors (Deputy Directors), Chief Accountant, and heads of affiliated units in the organizational structure.

- Risk management policy: identify, measure, prevent, manage, and control credit risk, operational risk, market risk, liquidity risk, and other risks during operation;

- Information technology:

(i) Expected financial investment for information technology;

(ii) The information technology system must ensure that it meets the requirements for governance and risk management of commercial banks and the regulations of the State Bank;

(iii) Ability to apply information technology, which clearly states: time to implement technology investment; type of technology expected to be applied; expected staff and staff's ability to apply information technology; ensure the information system can integrate and connect with the State Bank's management system to provide information according to the State Bank's management requirements;

(iv) Records on information technology infrastructure serving commercial bank operations;

(v) Solutions to ensure safety and security corresponding to the type of service expected to be deployed;

(vi) Identify, measure, and implement risk management plans for technologies expected to be applied in the field of commercial banking operations;

(vii) Expected assignment of responsibilities for reporting and controlling information technology system operations.

- The bank's ability to stand firm and develop in the market:

(i) Analyze and evaluate the banking market, stating the current situation, challenges, and prospects;

(ii) The bank's ability to participate and compete in the market, which proves the bank's advantages when participating in the market;

(iii) Strategy for developing and expanding the operational network and content of banking activities, customer types, and number of customers. In particular, there is a detailed analysis of meeting the conditions for conditional activities.

- Internal control and audit system:

(i) Operating principles of the internal control system;

(ii) Draft basic internal regulations on the bank's organization and operations, including at least the internal regulations specified in Clause 2, Article 93 of the Law on Credit Institutions, and the following regulations:

+ Regulations on the organization and operations of the Board of Directors, Board of Members, Supervisory Board, and Executives;

+ Regulations on the organization and operation of headquarters, branches, and other affiliated units.

(iii) Content and operational process of internal audit.

- Expected business plan for the first 3 years, which must include at least the following contents: market analysis, strategy, goals and action plans, financial reports for each year (balance sheet, business results report, cash flow report), minimum capital adequacy criteria, operational efficiency indicators, and an explanation of the ability to implement financial targets in each year).

(4) Documents proving the capacity of the expected management, control, and operating apparatus:

- Curriculum vitae according to the form specified in Appendix 03 of Circular 13/2023/TT-NHNN; judicial record card:

For people with Vietnamese nationality: a judicial record card issued by the judicial record database management agency, which must contain full information about criminal record status (including erased criminal records and unresolved criminal records) and information about bans on holding positions, establishing, and managing businesses and cooperatives;

For people who do not have Vietnamese nationality; Criminal record card or document of equivalent value (full information about criminal record status, including expunged and unexpunged criminal convictions; information about bans from holding positions, establishing, and managing businesses and cooperatives) must be issued by a competent Vietnamese agency or a foreign competent agency according to regulations;

A judicial record card or document of equivalent value must be issued by a competent authority no more than 06 (six) months before the time of submitting the application for a License;

Confirming the Curriculum Vitae of organizations and individuals is done on the basis of exploiting citizens' residence data on the National Population Database or checking the VNeID application according to the instructions of the Ministry of Public Security; do not require organizations and individuals to submit and present household registration books and paper temporary residence books in accordance with the provisions of Article 14 of Decree 104/2022/ND-CP of the Government;

- Copies of diplomas proving professional qualifications;

- Other documents proving satisfaction of conditions and standards as prescribed in the Law on Credit Institutions and relevant provisions of the law;

- In case the person expected to be elected as a member of the Board of Directors, Council of Members, member of the Supervisory Board, or General Director (Director) does not have Vietnamese nationality, in addition to the documents mentioned above, there must be a written commitment to fully meet the conditions to reside and work in Vietnam.

(5) 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, project to establish the bank, and List of expected management, control, and executive positions.

(6) Profile of the owner and founding member, who is a foreign credit institution:

- Audited financial statements for 5 years immediately preceding the year of submitting the application for License without any exception from the auditing unit;

- Copy of establishment and operation license or equivalent document;

- Documents from competent authorities in the home country providing information about foreign credit institutions are as follows:

(i) Content of permitted activities in the home country at the time of submitting the application for License:

(ii) Compliance with the law on banking operations and other legal regulations within 05 consecutive years immediately preceding the year of submitting the application for License and up to the time of submitting the application for License;

(iii) Capital adequacy ratio and other safety ratios according to the regulations of the home country in the year immediately preceding the year of submitting the application for a License and up to the time of submitting the application for a License;

(iv) Compliance with regulations on risk management and provisioning in the year immediately preceding the year of applying for a License and up to the time of submitting the application for a License.

- Documents or documents from an international credit rating organization providing a credit rating for a foreign credit institution within 06 months before the time of application submission;

- Charter on organization and operation of foreign credit institutions;

- Report on the establishment, operation, and development orientation of the foreign credit institution until the time of submitting the application for a License;

- Decision to appoint a representative of capital contribution at joint venture banks, banks with 100% foreign capital of foreign credit institutions according to the provisions of law, accompanied by the passport of the capital contribution representative.

(7) Profile of the founding member of a joint venture bank that is a Vietnamese commercial bank:

- Declaration of related persons according to the form specified in Appendix 06.

- Establishment license, business registration certificate, or equivalent document (except for Vietnamese enterprises);

- Document authorizing the capital representative at the bank according to the provisions of law;

- Charter of organization and operation;

- Copy of passport of the legal representative and the representative of the organization's capital contribution at the bank (for people without Vietnamese nationality);

- Document from the competent authority approving the organization to contribute capital to establish a bank;

- Financial statements for the year immediately preceding the year of submitting the application for License and Financial statements up to the latest date from the time of submitting the application for License have been independently audited by an auditing company on the list of auditing organizations that have been declared qualified for corporate auditing by the Ministry of Finance and the reports have no exceptions from the auditing unit;

- In addition to the above documents, founding shareholders must have the following documents:

- Curriculum vitae according to the form specified in Appendix 03 of Circular 13/2023/TT-NHNN; judicial record card;

For people with Vietnamese nationality: a judicial record card issued by the judicial record database management agency, which must contain full information about criminal record status (including criminal records that have been erased and criminal records that have not been erased) and information about bans on holding positions, establishing, and managing businesses and cooperatives;

For people without Vietnamese nationality: a judicial record card or document of equivalent value (with full information on criminal record status, including expunged and unexpunged criminal convictions; information about the ban on holding positions, establishing, and managing businesses and cooperatives) must be issued by competent Vietnamese agencies or foreign competent agencies according to regulations;

A judicial record card or document of equivalent value must be issued by a competent authority no more than 06 (six) months before the time of submitting the application for a License;

Confirming the Curriculum Vitae of organizations and individuals is done on the basis of exploiting citizens' residence data on the National Population Database or checking the VNeID application according to the instructions of the Ministry of Public Security; do not require organizations and individuals to submit and present household registration books and paper temporary residence books in accordance with the provisions of Article 14 of Decree 104/2022/ND-CP of the Government;

- Financial statements for 05 years immediately preceding the year of submitting the application for License have been independently audited by an auditing company on the list of certified auditing organizations declared by the Ministry of Finance to be qualified for corporate auditing, and these financial reports do not contain any exceptions from the auditing unit;

- Document from the tax authority or social insurance authority confirming the full implementation of the organization's tax and social insurance obligations.

(8) The joint venture contract has the main contents as prescribed by law; capital contribution agreement contract between founding members for 100% foreign-owned banks;

(9) Document from the competent authority of the home country committing to ensure the ability to supervise all activities of the foreign bank (including operations of joint venture banks and banks with 100% foreign capital in Vietnam) on the basis of consolidation according to international practices.

(10) Written commitment of the owner and founding members to:

- Ready to support finance, technology, administration, operations, and operations for joint venture banks and banks with 100% foreign capital;

- Ensuring that the actual value of the charter capital of joint-venture banks and banks with 100% foreign capital is maintained not lower than the legal capital level and fully meets regulations on operational safety according to regulations of the State Bank.

Documents submitted to supplement the application for a License after being approved in principle by the State Bank:

- The Charter of banking organization and operations has been approved by the Board of Members;

- Document from a commercial bank where the Preparatory Committee opened a capital contribution account confirming the number of capital contribution shares of the founding members;

- Document proving ownership or legal right to use the commercial bank's head office;

- Internal regulations on the organization and operation of joint venture banks and banks with 100% foreign capital specified in Point i, Clause 3, Article 14 of Circular 40/2011/TT-NHNN, approved by the Board of Members;

* Report of a founding member who is a domestic commercial bank on meeting the conditions specified in Point g, Clause 2, Article 9 of Circular 40/2011/TT-NHNN from the time of submitting the application for a License to the time of submitting additional documents;

- Document from the competent authority of the home country assessing that the owner and founding member is a foreign credit institution that meets the conditions specified in Points a, c, dd, Clause 2, Article 10 of this Circular from the time of submitting the application for License to the time of submitting additional documents;

- List of documents

In addition to the above documents, the Preparatory Committee to establish a 100% foreign-owned bank as a one-member limited liability company must submit the following additional documents:

(i) Decision of the owner on the appointment of Chairman of the Board of members, members of the Board of Members, members of the Supervisory Board, General Director (Director), Deputy General Director (Deputy Director), Chief accountant;

(ii) Minutes of the Supervisory Board meeting on the election of the Head of the Supervisory Board and full-time Supervisory Board members.

In addition to the above documents, the Preparatory Committee for establishing a joint venture bank, a bank with 100% foreign capital that is a limited liability company with two or more members, must submit the following additional documents:

(i) Minutes of the first Capital Contributing Members meeting;

(ii) Minutes of the meeting of the Board of Members approving the contents of the election of Chairman of the Board of Members; Minutes of the Supervisory Board meeting on the election of Head of the Supervisory Board and full-time Supervisory Board members;

(iii) Decision of the Board of Members on the appointment of General Director (Director), Deputy General Director (Deputy Director), and Chief Accountant.

In case the documents are copies and not certified copies or copies issued from the original book, the original must be presented for comparison; the collator must sign the copy and is responsible for the accuracy of the copy compared to the original.

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