Are commercial banks allowed to accept corporate bond purchase trust in Vietnam?

Are commercial banks allowed to accept corporate bond purchase trust in Vietnam? (Internet image)

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

1. What is corporate bond purchase trust?

Corporate bond purchase trust refers to the trustor’s act of entrusting the trustee with the purchase of corporate bonds, inclusive of convertible bonds.

(Clause 6 of Article 3 of Circular 30/2014/TT-NHNN)

2. Are commercial banks allowed to accept corporate bond purchase trust in Vietnam?

Pursuant to Article 10 of Circular 30/2014/TT-NHNN, the regulations on offer and acceptance of the trusteeship to/from commercial banks in Vietnam are as follows:

- Commercial banks shall be entitled to offer their trusteeship to:

+ Other commercial banks, foreign bank branches, financial companies for the purpose of granting loans to clients;

+ Cooperative banks for the purpose of granting loans to clients who are not members of cooperative banks;

+ People's credit funds for the purpose of granting loans to clients who are not members of people's credit funds;

+ Microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and super-small enterprises;

+ Other commercial banks, organizations permitted to trade securities by laws for the purpose of contributing capital and purchasing stocks of other enterprises and credit institutions;

+ Other commercial banks, foreign bank branches, organization permitted to trade securities by laws for the purpose of purchasing corporate bonds.

- Commercial banks are entitled to accept the trusteeship from:

+ Other commercial banks, banks for social policies, foreign bank branches, financial companies, cooperative banks and organizations for the purpose of granting loans to clients;

+ Other commercial banks, organizations permitted to trade securities by laws for the purpose of contributing capital and purchasing stocks of other enterprises and credit institutions;

+ Other commercial banks, foreign bank branches, organization permitted to trade securities by laws for the purpose of purchasing corporate bonds.

In addition, Point d of Clause 1 of Article 11 of Circular 30/2014/TT-NHNN on offer and acceptance of trusteeship to/from foreign bank branches, in which, foreign bank branches shall be entitled to offer the trusteeship to microfinance institutions for the purpose of granting loans to individuals, family households that earn low income, and super-small enterprises;

Thus, according to the above regulations, commercial banks are allowed to accept corporate bond purchase trust in Vietnam.

3. What are the cases in which trusteeship acceptance are prohibited in Vietnam?

Pursuant to Article 9 of Circular 30/2014/TT-NHNN, cases in which trusteeship acceptance are prohibited in Vietnam include:

- Credit institutions and foreign bank branches shall not be allowed to establish the fiduciary relationship with trust beneficiaries ineligible for the credit extension stipulated in Article 126, 127 of the Law on Credit Institutions 2010 and the State Bank’s regulations on safety limits and ratio for transactions of credit institutions and foreign bank branches.

- Commercial banks, foreign bank branches, cooperative banks, people's credit funds, microfinance institutions shall not be allowed to offer and accept the trusteeship for capital leases.

- Credit institutions (exclusive of commercial banks), foreign bank branches shall not be entitled to offer and accept the trusteeship for capital contribution and stock purchase.

Commercial banks shall not be allowed to offer and accept the trusteeship for capital contribution and stock purchase to/from trust beneficiaries ineligible for such transactions stipulated in Clause 5 Article 129 of the aw on Credit Institutions 2010 and the State Bank’s regulations on safety limits and ratio for transactions of credit institutions and foreign bank branches.

- Credit institutions (exclusive of financial companies) and foreign bank branches shall not be allowed to offer and accept the trusteeship for investments in production and trading projects.

- Financial companies, finance lease enterprises, cooperative banks, people's credit funds and microfinance institutions shall not be allowed to offer and accept the trusteeship for corporate bond purchase.

- Credit institutions and foreign bank branches shall not be allowed to offer and accept the trusteeship for purchase of bonds to/from other credit institutions and foreign bank branches.

Nguyen Ngoc Que Anh

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