Cases of freezing capital and assets of foreign bank branches in Vietnam

Cases of freezing capital and assets of foreign bank branches in Vietnam (Internet image)

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

1. Rules for freezing and unfreezing capital and assets of foreign bank branches in Vietnam

According to Article 4 of Circular 27/2018/TT-NHNN, the freezing and unfreezing of capital and assets of a FBB is meant to protect the depositors’ interests.

- The Governor of the State bank shall consider freezing or unfreezing capital and assets of a FBB in any of the cases specified in Article 5 of Circular 27/2018/TT-NHNN. The decision to freeze a FBB’s capital and assets shall specify the reasons for freezing, beginning and ending time, freezing method and responsibilities of the branch.

- The Governor of the State bank shall consider issuing a decision to unfreeze capital and assets of a FBB in any of the cases specified in Article 6 of Circular 27/2018/TT-NHNN. The decision to unfreeze a FBB’s capital and assets shall specify the time of unfreezing and responsibilities of the branch.

2. Cases of freezing capital and assets of foreign bank branches in Vietnam

According to Article 5 of Circular 27/2018/TT-NHNN, the State bank shall consider freezing a FBB’s capital and asset in the following cases:

- The true value of granted capital of the FBB is smaller than the legal capital for more than 06 months.

- The branch fails to maintain the adequacy ratio specified in Article 130 of the Law on credit institutions and fails to achieve the adequacy ratio by the deadline imposed by the State bank.

- The accumulated loss incurred by the FBB exceeds 50% of its granted capital and reserve funds specified in the latest audited financial statement.

- The parent bank fails to fulfill its commitments regarding its branch in Vietnam despite the State bank’s request.

- There is information that the parent bank is suspected of insolvency or put under special control by the authority of its home country or it is ordered to undergo dissolution, bankruptcy or its license is revoked.

3. Cases of unfreezing capital and assets of foreign bank branches in Vietnam

According to Article 6 of Circular 27/2018/TT-NHNN, the State bank shall consider unfreezing a FBB’s capital and asset in the following cases:

- The FBB has rectified the issues mentioned in Clause 1, 2, 3 Article 5 of Circular 27/2018/TT-NHNN.

- The parent bank has fulfilled its commitments regarding its branch in Vietnam at the State bank’s request mentioned in Clause 4 Article 5 of Circular 27/2018/TT-NHNN.

- The State bank receives information from a competent authority of the parent bank’s home country that such parent bank has rectified the issues mentioned in Clause 5 Article 5 of Circular 27/2018/TT-NHNN.

4. Responsibilities of foreign bank branches when freezing capital and assets in Vietnam in Vietnam

Responsibilities of foreign bank branches when freezing capital and assets in Vietnam in Vietnam according to Article 7 of Circular 27/2018/TT-NHNN are as follows:

- Provide adequate and timely information and documents about its organization and operation as requested by the State bank in any of the cases mentioned in Article 5 of Circular 27/2018/TT-NHNN.

- Comply with the State bank’s decision in case its capital and assets are frozen.

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