Circular No. 10/2011/TT-NHNN dated April 22, 2011 of the State Bank of Vietnam on stipulating the criteria for selecting strategic shareholders to the equitized state-owned commercial banks

THE STATE BANK OF VIETNAM

Circular No. 10/2011/TT-NHNN of April 22, 2011, stipulating criteria for selection of strategic shareholders of equitized state-owned commercial banks

THE STATE BANK OF VIETNAM

Pursuant to June 16, 2010 Law No. 46/2010/QH12 on the State Bank of Vietnam;

Pursuant to June 16, 2010 Law No. 47/2010/QH12 on Credit Institutions;

Pursuant to the Government’s Decree No. 96/2008/ND-CP of August 26, 2008, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 109/2007/ND-CP of June 26, 2007, on transformation of enterprises with 100% state capital into joint-stock companies;

Pursuant to the Government’s Decree No. 69/2007/ND-CP of April 20, 2007, on foreign investors’ purchase of shares of Vietnamese commercial banks;

Based on the Prime Minister’s directing opinions in the Government Office’s Official Letter No. 7054/VPCP-DMDN of October 12, 2009, on criteria for selection of strategic shareholders of equitized state-owned commercial banks;

The State Bank of Vietnam (below referred to as the State Bank) stipulates criteria for selection of strategic shareholders of equitized state-owned commercial banks as follows:

Article 1. Scope of regulation and subjects of application

1. This Circular stipulates criteria for selection of strategic shareholders of equitized state-owned commercial banks.

The approval of strategic shareholders of state-owned commercial banks complies with the Government’s Decree No. 109/2007/ND-CP of June 26, 2007, on transformation of enterprises with 100% state capital into joint-stock companies, and other relevant regulations.

2. This Circular applies to equitized state-owned commercial banks, including:

a/ State-owned commercial banks which are undergoing equitization;

b/ State-owned commercial banks which have been equitized but not yet been listed on the securities market;

c/ State-owned commercial banks which have been equitized and listed on the securities market.

Article 2. Purpose and requirements

1. Equitized state-owned commercial banks shall select their strategic shareholders being investors that are prestigious, financially capable and able to assist them in:

a/ Raising their governance, administration and risk management capabilities;

b/ Applying modern technologies;

c/ Developing banking products and services;

d/ Developing other fields in conformity with their development strategies.

2. Strategic shareholders of equitized state-owned commercial banks must satisfy the following requirements:

a/ Having strategic interests conformable with these banks’ development strategies;

b/ Creating no conflict of interests;

c/ Forming no monopoly causing unfair competition against customers and other investors of these banks and other credit institutions.

Article 3. Criteria for selection of strategic shareholders

A strategic shareholder must satisfy at least the following criteria:

1. For foreign strategic shareholders:

a/ Being a foreign credit institution or financial institutions, having a total asset of at least USD 20 (twenty) billion in the year preceding the year of registration for being selected as a strategic shareholder;

b/ Having over 5 (five) years’ experience in international operation;

c/ Being rated by independent international credit rating agencies (Moody’s, Standard & Poor’s, Fitch Ratings, etc.) as capable of fulfilling their financial commitments and normally operating even when economic situation and conditions become unfavorable;

d/ Not acting as a strategic, major or founding shareholder of any other credit institutions in Vietnam;

e/ Having made a written commitment to assisting the equitized state-owned commercial bank in the fields specified in Clause 1, Article 2 of this Circular and acting as a strategic shareholder of the equitized state-owned commercial bank for a long term.

2. For domestic strategic shareholders:

a/ Being an enterprise that has governance experience and good governance capability;

b/ Having a total asset of at least VND 3 (three) trillion in the year preceding the year of registration for being selected as a strategic shareholder;

c/ Having a sufficient contributed capital: The remainder of its equity capital minus long-term investments made with equity capital and short-term assets minus short-term debts is at least equal to the contributed capital according to the registration for being selected as a strategic shareholder;

d/ Having a return-on-equity (ROE) rate of over 15% and a return-on-asset (ROA) rate of over 1% in the year preceding the year of registration for being selected as a strategic shareholder, and a positive net profit for three consecutive years prior to the year of registration;

e/ Owing no non-performing debts to any credit institutions;

f/ Not acting as a strategic, major or founding shareholder of any credit institutions in Vietnam at the time of registration for being selected as a strategic shareholder;

g/ Having made a written commitment to assisting the equitized state-owned commercial bank in one or several fields specified in Clause 1, Article 2 of this Circular;

h/ Having made a written commitment to refraining from transferring purchased shares for at least 5 years after purchasing these shares and becoming a strategic shareholder and from conducting any transaction with the equitized state-owned commercial bank causing a conflict of interests and monopoly or unfair competition against customers and other investors of the equitized state-owned commercial bank and other credit institutions;

i/ In addition to the conditions specified at Points a thru h, Clause 2 of this Article, a domestic strategic shareholder being a credit institution must also:

- Maintain limits to assure safety of its operations under regulations of the State Bank;

- Have a capital adequacy rate (CAR) of over 10% in the year preceding the year of registration for being selected as a strategic shareholder;

- Have a non-performing debt rate of under 2% in the year preceding the year of registration for being selected as a strategic shareholder;

- Refrain from purchasing shares of the equitized state-owned commercial bank in case this bank is a shareholder or capital contributor of the credit institution at the time of registration for being selected as a strategic shareholder.

Article 4. Selection of strategic shareholders

Pursuant to this Circular, equitized state-owned commercial banks shall elaborate specific criteria for selection of their strategic shareholders and incorporate them in their equitization schemes (for state-owned commercial banks currently undergoing equitization) or plans on selection of strategic shareholders (for equitized state-owned commercial banks) for submission to the Prime Minister for approval, and may use these criteria in selecting strategic shareholders after obtaining the Prime Minister’s approval.

Article 5. Implementation provisions

1. This Circular takes effect on June 1, 2011.

2. The director of the Office, the Chief Inspector and bank supervisors, heads of the units of the State Bank and chairpersons of the boards of directors of equitized state-owned commercial banks shall implement this Circular.-

For the Governor
Deputy Governor
TRAN MINH TUAN