Procedures for approving eligibility for conversion of legal forms of overseas subsidiary banks in Vietnam

Procedures for approving eligibility for conversion of legal forms of overseas subsidiary banks in Vietnam (Image from the Internet)

1. Conditions for conversion of legal forms of overseas subsidiary banks in Vietnam from August 15, 2024

According to Article 24 Circular 32/2024/TT-NHNN, a commercial bank may convert the legal form of a subsidiary bank from a limited liability company to a joint stock company and vice versa; from a single-member limited liability company to a limited liability company with two or more members and vice versa when the following conditions are met:  

- The conditions stipulated in Points e and g, Clause 1, Article 6 Circular 32/2024/TT-NHNN as follows:

+ At the time of application, the Board of Directors, the Board of Members, and the Supervisory Board must have the number and structure in accordance with the law, and not lack a General Director;

+ At the time of application, the commercial bank must have an internal audit department and an internal control system that complies with Articles 57 and 58 of the Law on Credit Institutions 2024 and related legal provisions;

- The subsidiary bank of the commercial bank, after changing its legal form, must ensure compliance with Clause 7, Article 3 of Circular 32/2024/TT-NHNN.

- In case the commercial bank increases capital in the subsidiary bank when changing its legal form, in addition to the conditions stipulated in Clauses 1 and 2, Article 24 Circular 32/2024/TT-NHNN, the following conditions must be met:

+ The conditions stipulated in Points a, c, d, and dd, Clause 1, Article 6 Circular 32/2024/TT-NHNN, including:

++ Having the actual value of the charter capital at the end of December 31 of the year preceding the application year not less than the legal capital. The actual value of the charter capital is determined according to the regulations of the Governor of the State Bank regarding the limits and safety ratios based on the audited separated financial statements of the year preceding the application year;

++ Complying with the safety restrictions in the operations of credit institutions as stipulated in Articles 134, 135, 136, 137; Clause 1, Article 138 and Article 142 of the Law on Credit Institutions 2024 and the instructions from the State Bank on these regulations continuously for 12 months prior to the application month;

++ Correctly and fully implementing the regulations on classifying assets, provisioning levels, provisioning methods, and using provisions to handle risks in operations as stipulated by the law in the quarter preceding the application time;

++ Having a non-performing loan ratio as regulated by the State Bank on asset classification at the end of December 31 of the year preceding the application year and at the end of the month preceding the application time not exceeding 3% or another ratio as decided by the Governor of the State Bank from time to time;

+ The conditions stipulated in Clauses 4 and 5, Article 9 Circular 32/2024/TT-NHNNN:

++ Having total assets of 100,000 billion VND or more according to the consolidated audited financial statements of the year preceding the application year.

++ Having profitable business operations according to the consolidated and separated audited financial statements for the 03 years preceding the application year.

2. Procedures for approving eligibility for conversion of legal forms of overseas subsidiary banks in Vietnam

- The commercial bank shall prepare a dossier as stipulated in Article 25 Circular 32/2024/TT-NHNN and submit it to the State Bank of Vietnam (Single-window Department).

- Within 45 working days from the date of receipt of the complete dossier as stipulated in Article 25 Circular 32/2024/TT-NHNN, the State Bank of Vietnam shall issue a written approval or disapproval for the commercial bank to change the legal form of its overseas subsidiary bank; in case of disapproval, the written document will specify the reasons.

- Within 24 months from the date the State Bank of Vietnam issues the approval document as stipulated in Clause 2, Article 26 Circular 32/2024/TT-NHNN, the commercial bank must complete the procedures for the legal form change. If this period expires and the commercial bank has not completed the procedures for the legal form change, the approval document from the State Bank of Vietnam shall automatically become invalid.

(According to Article 26 Circular 32/2024/TT-NHNN)

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