Changes regarding banks to required approval from the State Bank of Vietnam

Changes regarding banks to required approval from the State Bank of Vietnam (Internet image)

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

1. Changes regarding banks to required approval from the State Bank of Vietnam

A credit institution or foreign bank branch must obtain the State Bank's written approval before carrying out procedures to change any of the following contents:

- Its name or place of its head office;

- Its charter or allocated capital, except the case specified in Clause 3 of Article 29 of the Law on Credit Institutions 2010;

- Location of a branch of the credit institution;

- Contents, scope and duration of operation;

- Sale or transfer of the owner’s stakes; sale or transfer of a capital contributor’s stake; sale or transfer of a major shareholder’s shares; sale or transfer of shares that converts a major shareholder into a common shareholder and vice versa.

In case of transfer of stakes of a credit institution that is a limited liability company, the buyer or transferee must satisfy the conditions applied to owners and capital contributors specified in Article 20, Article 70 and Article 71 of the Law on Credit Institutions 2010;

- Any business suspension of 05 working days or more, except suspension due to force majeure events;

- Listing of shares on a foreign securities market.

(Clause 1, Article 29 of the Law on Credit Institutions 2010, amended in 2017)

2. Conditions for inaugurating operation in Vietnam

Specifically, Article 26 of the Law on Credit Institutions 2010 stipulates the conditions for inaugurating operation as follows:

- A licensed credit institution, foreign bank branch or representative office of a foreign credit institution or another foreign institution engaged in banking operations may operate only from the date of operation inauguration.

- To inaugurate its operation, a licensed credit institution or foreign bank branch must fully meet the following conditions:

= It has registered its charter with the State Bank:

= It possesses a business registration certificate. It has sufficient charter or allocated capital, sufficient cash vaults fully meeting the State Bank's requirements and a head office fully meeting asset safety assurance conditions and banking operation requirements;

= It has an organizational structure, managerial and executive apparatus, internal audit and risk management and internal control system relevant to its type under the Law on Credit Institutions 2010 and other relevant laws;

= Its information technology system meets managerial and operational requirements;

= It has an internal management regulation on the organization and operation of the Board of Directors, Members' Council. Control Board and Director General (Director) and professional divisions at its head office; an internal regulation on risk management; and a regulation on network management;

= Its charter or allocated capital in Vietnam dong has been fully deposited at a non-interest bearing blocked account opened at the State Bank at least 30 days before inaugurating its operation. Its charter or allocated capital shall be released after it inaugurates its operation;

= It has publicized information on its operation under Article 25 of the Law on Credit Institutions 2010.

- A credit institution, foreign bank branch or representative office of a foreign credit institution or another foreign institution engaged in banking operations shall inaugurate its operation within 12 months after obtaining a license.

Fast this lime limit, if it fails to do so, the State Bank shall revoke its license.

- A licensed credit institution or foreign bank branch shall notify the State Bank of its operation inauguration conditions specified in Clause 2 of Article 26 of the Law on Credit Institutions 2010 at least 15 days before the tentative inauguration date.

The State Bank shall suspend the operation inauguration when such institution or branch fails to fully meet the conditions under Clause 2 of Article 26 of the Law on Credit Institutions 2010.

Ho Quoc Tuan

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