Circular No. 11/2020/TT-NHNN amending Circular No. 24/2017/TT-NHNN

CIRCULAR

On amending and supplementing a number of articles of the Circular No. 24/2017/TT-NHNN dated December 29, 2017 of the Governor of the State Bank of Vietnam, guiding the order and procedures for revocation of licenses and liquidation of assets of credit institutions and foreign bank branches; the order and procedures for revocation of licenses of representative offices of foreign credit institutions and other foreign institutions engaged in banking activities

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Pursuant to the Law on State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law on Amending and Supplementing a Number of Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to the Government’s Decree No. 16/2017/ND-CP dated February 17, 2017 on defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Government’s Decree No. 26/2014/ND-CP dated April 07, 2014 on organization, tasks, and powers of the Banking Supervisors and Inspectors and the Government’s Decree No. 43/2019/ND-CP dated May 17, 2019 on amending and supplementing a number of Articles of the Government’s Decree 26/2014/ND-CP dated April 07, 2014 on organization, tasks, and powers of the Banking Supervisors and Inspectors;

At the proposal of the Chief of the Banking Supervision Agency;

The Governor of the State Bank of Vietnam hereby promulgates the Circular on amending and supplementing a number of articles of the Circular No. 24/2017/TT-NHNN dated December 29, 2017 of the Governor of the State Bank of Vietnam, guiding the order and procedures for revocation of licenses and liquidation of assets of credit institutions and foreign bank branches; the order and procedures for revocation of licenses of representative offices of foreign credit institutions and other foreign institutions engaged in banking activities.

Article 1. To amend and supplement a number of articles of the Circular No. 24/2017/TT-NHNN dated December 29, 2017 of the Governor of the State Bank of Vietnam, guiding the order and procedures for revocation of licenses and liquidation of assets of credit institutions and foreign bank branches; the order and procedures for revocation of licenses of representative offices of foreign credit institutions and other foreign institutions engaged in banking activities (hereinafter referred to as the Circular No. 24/2017/TT-NHNN)

1.To add Article 3a as follows:

“Article 3a.Competence to decide on revocation of licenses

1. The Governor of the State Bank of Vietnam (hereinafter referred to as the Governor) may decide on:

a) Revoking licenses of credit institutions;

b) Revoking licenses of foreign bank branches subject to micro-safety supervision and inspection of the Banking Supervision Agency according to the Governor s assignment.

2. The Director of the State Bank branch may decide on:

a) Revoking licenses of foreign bank branches that head offices’ located in areas, except for foreign bank branches specified at Point b, Clause 1 of this Article;

b) Revoking licenses of representative offices located in areas.”.

2. To amend and supplement Clause 1 of Article 7 as follows:

“1. Approval of request for dissolution:

a) A credit institution or foreign bank branch shall:

(i) Hire an enterprise granted with a certificate of eligibility for provision of valuation services in accordance with law provisions on valuation to value its assets, and determine the value of owner’s equity of the enterprise in the year preceding the year of request for dissolution and in the quarter preceding the time of request for dissolution in accordance with law provisions;

(ii) Work out an asset liquidation plan in accordance with Point b, Clause 4 of this Article and based on the results of asset valuation to determine the value owner’s equity of the enterprise in accordance with Point a(i) of this Clause;

(iii) Make one (01) dossier set under Clause 4 of this Article, then submit it directly at the Single-window section or send it by post to the State Bank (for case of revocation of licenses under Clause 1, Article 3a of this Circular), or to the State Bank branch (for case of revocation of licenses under Point a, Clause 2, Article 3a of this Circular);

b) Within fifteen (15) days after receiving a complete and valid dossier specified in Clause 4 of this Article, the Banking Supervision Agency shall examine it and send it to the following for opinion or submit it to the Governor for doing so:

(i) The State Bank branch, on the actual organization and operation of the credit institution or foreign bank branch and its capability to pay all debts and other asset liabilities; its view on the asset liquidation, dissolution, license revocation, and possible handling measures related to the asset liquidation, dissolution and license revocation; impacts of the dissolution and license revocation on the safety of the system of credit institutions in the locality;

(ii) The People’s Committee, on the dissolution and license revocation and impacts of the dissolution and license revocation on the political, social and economic stability of the locality;

(iii) Related ministries, sectors and units affiliated to the State Bank, on the asset liquidation, dissolution and license revocation (when finding it necessary);

b) Within fifteen (15) days after receiving a complete and valid dossier specified in Clause 4 of this Article, the State Bank branch shall examine it and send a written request for opinions or submit the written request for opinions to the Governor in accordance with Point b(ii) and b(iii) of this Clause;

d) Within fifteen (15) days after receiving the request for opinion, the agencies and units that are sent a written request for opinion as prescribed at Points b and c of this Clause shall send their written opinions to the Banking Supervision Agency or the State Bank branch;

d) Within fifteen (15) days after the expiration of the time limit for consultancy, the Banking Supervision Agency or the State Bank branch shall summarize opinions and, if finding that the asset liquidation plan proves the capability to pay all debts and other asset liabilities and guarantee the interests of debtors and creditors, the Banking Supervision Agency shall consider and propose the Governor or the Director of the State Bank branch:

(i) To issue a written approval for the dissolution, covering the approval for an asset liquidation plan and requesting the credit institution or foreign bank branch to form a liquidation council and liquidate its assets according to the approved plan; and form a liquidation supervision team; or,

(ii) To send a written request to the credit institution or foreign bank branch to report and explain related contents;

e) Within ten (10) working days after receiving an explanatory report of the credit institution or foreign bank branch as specified at Point dd(ii) of this Clause, the Banking Supervision Agency shall propose the Governor or the Director of the State Bank branch to follow Point dd(i) of this Clause;

g) If finding that the asset liquidation plan fails to prove the capability to pay all debts and other asset liabilities, the Banking Supervision Agency shall consider and propose the Governor or the Director of the State Bank branch to issue a written disapproval of the dissolution, clearly stating the reason.”.

3. To amend and supplement Clause 3 of Article 7 as follows:

“3. Revocation of licenses, for cases specified in Clause 1, Article 3a:

a) Within fifty (50) days after receiving the documents of the liquidation supervision team referred to at Points c and d, Clause 2 of this Article, the Banking Supervision Agency shall consider and propose the Governor:

(i) To issue a decision on liquidation termination and a decision on license revocation, for the cases specified in Clause 1, Article 13 of this Circular; or,

(ii) To issue a decision on liquidation termination for carrying out bankruptcy procedures in accordance with law provisions, for the cases specified in Clause 2, Article 13 of this Circular. The State Bank shall revoke the license after the judge appoints an asset management officer or enterprise to manage and liquidate the assets; or,

(iii) To send a written request to the credit institution or foreign bank branch to report and explain asset liquidation-related issues (if any);

b) Within ten (10) working days after receiving an explanatory report of the credit institution or foreign bank branch as prescribed at Point a(iii) of this Clause, the Banking Supervision Agency shall consider and propose the Governor to follow Point a(i) or Point a(ii) of this Clause;

c) Within fifty (60) days after receiving the documents of the liquidation supervision team referred to at Points c and d, Clause 2 of this Article, the Governor shall issue a decision or a written document in accordance with Point a of this Clause.”.

4. To add Clause 3a, Article 7 as follows:

“3a. Revocation of licenses, for cases specified at Point a, Clause 2, Article 3a:

a) Within forty (40) days after receiving the documents of the liquidation supervision team as prescribed at Point c, Clause 2 of this Article, the Director of the State Bank branch shall:

(i) Issue a decision on liquidation termination and a decision on license revocation; or,

(ii) Send a written request to the foreign bank branch to report and explain asset liquidation-related issues (if any);

b) Within ten (10) working days after receiving an explanatory report of the foreign bank branch as prescribed at Point a(ii) of this Clause, the Director of the State Bank branch shall comply with at Point a(i) of this Clause.”.

5. To amend and supplement Article 8 as follows:

“Article 8. Order and procedures for revocation of the license of a credit institution or foreign bank branch subject to license revocation

1. Based on the inspection conclusions or bank supervision results regarding the dissolution or revocation of the license of a credit institution or foreign bank branch or a competent authority’s decision on the policy on dissolution of a credit institution under special control, the Banking Supervision Agency shall consider and propose the Governor to send a written document or the Director of the State Bank branch to send a written request to the credit institution or foreign bank branch to liquidate its assets and form a liquidation council and a liquidation supervision team.

2. The liquidation of assets must comply with Points b, c and d, Clause 2, Article 7, Section 2, Chapter II of this Circular and relevant law regulations.

3. The order for revocation of the license of a credit institution or foreign bank branch subject to license revocation must comply with Clauses 3 and 3a, Article 7 of this Circular.”.

6. To amend and supplement Clause 2 of Article 9 as follows:

“2. Within seven (07) working days after effective date of a decision on revocation of the license:

a) In case of revoking licenses under Clause 1, Article 3a of this Circular, the State Bank shall be responsible for publishing the revocation of credit institution or foreign bank branch’s licenses on its Portal and send the decision on license revocation to the People’s Committee, the National Financial Supervisory Commission, the Ministry of Finance, the credit institution or foreign bank branch, and the State Bank branch, in service of the state management and publish on the website of the State Bank branch (if any);

b) In case of revoking licenses under point a, Clause 2, Article 3a of this Circular, the State Bank branch shall be responsible for publishing the revocation of foreign bank branch’s licenses on its website (if any) and send the decision on license revocation to the People’s Committee, the National Financial Supervisory Commission, the Ministry of Finance, the foreign bank branch, and the State Bank, in service of the state management and publish on the website of the State Bank.”.

7. To amend and supplement Article 10 as follows:

“Article 10. Members, tasks and powers of liquidation councils

1. Members of a liquidation council for a credit institution:

a) A liquidation council must consist of the chairperson of the Board of Directors or the Members’ Council; at least one (01) independent member of the Board of Directors (if any); the head of the Control Board, the Director General (Director), the chief accountant; some other members selected from the members of the Board of Directors, Members’ Council or Control Board (if any), major shareholders, owners, capital contributors and five (05) clients with the largest outstanding deposits at the credit institution (if agreed by clients) at the time of requesting dissolution. At the time of forming and during the operation of the liquidation council of the credit institution, if the post of chairperson of the Board of Directors or the Members’ Council is vacant, the agency with deciding competence shall select a replacement from the members of the Board of Directors, the Members’ Council to participate in the liquidation council; in case the post of head of the Control Board, Director  General (Director) or chief accountant is vacant, the agency with deciding competence shall select a replacement to join the liquidation council;

b) The chairperson of the Board of Directors or the Members Council shall act as the liquidation council chairperson. At the time of forming and during the operation of the liquidation council of the credit institution, if the post of chairperson of the Board of Directors or the Members’ Council is vacant, the one selected to participate in the liquidation council (instead of the chairperson of the Board of Directors or the Members’ Council) by the agency with deciding competence under Point a of this Clause shall act as the liquidation council chairperson;

c) In case there is a new chairperson of the Board of Directors or the Members in the credit institution, he/she shall be the liquidation council chairperson instead of the one acting as the liquidation council chairperson as prescribed at Point b of this Clause.

2. Members of a liquidation council for a foreign bank branch:

a) A liquidation council must consist of the Director General (Director), the chief accountant and at least one (01) member designated by the parent bank and five (05) clients with the largest outstanding deposits at the foreign bank branch (if agreed by clients) at the time of requesting dissolution. At the time of forming and during the operation of the liquidation council of the foreign bank branch, if the post of Director General (Director) or chief accountant is vacant, the agency with deciding competence of the parent bank shall select a replacement to join the liquidation council;

b) The Director General (Director) of the foreign bank branch shall act as the liquidation council chairperson. At the time of forming and during the operation of the liquidation council of the foreign bank branch, if the post of Director General (Director) is vacant, the one selected to participate in the liquidation council (instead of the Director General (Director)) by the agency with deciding competence of the parent bank under Point a of this Clause shall act as the liquidation council chairperson;

c) In case there is a new Director General (Director) in the foreign bank branch, he/she shall be the liquidation council chairperson instead of the one acting as the liquidation council chairperson as prescribed at Point b of this Clause.

3. Credit institutions and foreign bank branches which voluntarily request dissolution may decide on their liquidation councils with the members defined in Clauses 1 and 2 of this Article.

4. The Governor or the Director of the State Bank branch shall decide on the liquidation council for a credit institution or foreign bank branch subject to license revocation as follows:

a) Members defined in Clauses 1 and 2 of this Article at the proposal of the credit institution or foreign bank branch; or,

b) Other members decided by the Governor at the proposal of the Banking Supervision Agency or other members decided by the Director of the State Bank branch, in case the credit institution or foreign bank branch does not propose members as prescribed in Clauses 1 and 2 of this Article.

5. Duties and powers of a liquidation council:

a) To use the seal of the credit institution or foreign bank branch in the process of liquidation of assets of the credit institution or foreign bank branch in accordance with law;

b) To review all assets and liabilities, and items off the balance sheet of the credit institution or foreign bank branch; to draw up a list of creditors and debtors and their debts at the time of asset liquidation and a list of assets of the credit institution or foreign bank branch for handling;

c) To organize the liquidation of assets in accordance with this Circular and relevant regulations and apply every measure to recover debts and assets of the credit institution or foreign bank branch;

d) Within the first five (05) working days of every month or irregularly, to report the asset liquidation, asset division and other arising matters to the liquidation supervision team;

dd) Expenses for operation of a liquidation council shall be paid by the credit institution or foreign bank branch. The accounting of these expenses must comply with the current accounting regime;

e) The liquidation council shall finish its duties if the credit institution terminates its legal persons or the foreign bank branch terminates its operations in accordance with law provisions.”.

8. To amend and supplement Clause 4 of Article 12 as follows:

“4. Within forty (40) days after receiving the written request of the liquidation council or the liquidation supervision team referred to in Clause 2 of this Article, the State Bank or the State Bank branch shall issue a written approval or disapproval of the request for extension of the liquidation time limit.”.

9. To amend and supplement Clause 1 of Article 13 as follows:

“1. It has paid all debts and other asset liabilities in accordance with Clauses 1 and 2. Article 11 of this Circular.”.

10. To amend and supplement Clause 2 of Article 16 as follows:

“2. The head and members of a liquidation supervision team shall be liable for their duty performance to the Governor or the Director of the State Bank branch.”.

11. To amend and supplement Clause 5, Article 16 as follows:

“5. A liquidation supervision team shall finish its tasks when the Governor or the Director of the State Bank branch issues a decision on termination of the liquidation of assets of the credit institution or foreign bank branch.”.

12. To amend and supplement Clause 7 of Article 17 as follows:

“7. The liquidation supervision team shall submit to personal direction by the Governor or the Director of the State Bank branch.”.

13. To amend and supplement Article 18 as follows:

“Article 18. Order and procedures for revocation of licenses of representative offices

1. In case a representative office requests operation termination:

a) The Representative office shall make one (01) set of dossier according to Article 19 of this Circular, then submit it directly at the Single-window section or send it by post to the State Bank branch;

b) Within five (05) working days after receiving a complete dossier made under Article 19 of this Circular, the State Bank branch shall examine it and consult in writing the related units affiliated to the State Bank on the operation termination, license revocation and handling measures in relation to the operation termination and license revocation (when finding it necessary);

c) Within seven (07) working days after receiving the request of the State Bank branch, the consulted units as prescribed at Point b of this Clause shall send their written opinions to the State Bank branch;

d) Within twenty (20) days from the expiration of the time limit for giving opinion, the Director of the State Bank branch shall:

(i) Issue a decision on license revocation, request the representative office to liquidate the office rent contract and pay liabilities and other debts (if any) to related individuals and organizations, and carry out procedures for operation termination, and closure, return the operation registration paper and seal in accordance with law provisions; or,

(ii) To request in writing the representative office to report and explain related issues (if any);

dd) Within five (05) working days after receiving an explanatory report of the representative office as prescribed at Point d(ii) of this Clause, the Director of the State Bank branch shall comply with Point d(i) of this Clause.

2. In case a representative office is subject to license revocation:

In case where the dossier of request for granting license of a representative office contains fraudulent information for the grant of license; or the representative office fails to operate according to the contents stated on the license; or foreign credit institution or another foreign institution had its banking operation dissolved or declared bankrupt, or had its license revoked or had its operation suspended by the competent agency of the country where such institution’ head office is located, the Director of the State Bank branch shall comply with Point d(i), Clause 1 of this Article.

3. In case where a representative office does not request for extension of the operation period according to the State Bank’s regulations, within ten (10) working days after the expiration of the time limit for submitting the dossier of request for extension of the operation period as prescribed, the Director of the State Bank branch shall send a written request to the representative office for liquidate the office rent contract and pay liabilities and other debts (if any) to related individuals and organizations, and carry out procedures for operation termination, and closure, return the operation registration paper and seal in accordance with law provisions.

4. In case where a representative office already requested for extension of the operation period but had no writing approval from the State Bank branch, at such written disapproval sent to the representative office by the Director of the State Bank branch, there must be contents of requesting the representative office to liquidate the office rent contract and pay liabilities and other debts (if any) to related individuals and organizations, and carry out procedures for operation termination, and closure, return the operation registration paper and seal in accordance with law provisions.”.

14. To amend and supplement Clause 1 of Article 20 as follows:

“1. Within seven (07) working days after a decision on revocation of the license of the representative office takes effect, the State Bank branch shall be responsible for publishing such revocation on its website (if any) and send the decision on revocation of the license to the People’s Committee, the representative office, and the State Bank branch in service of the state management, and publish it on the State Bank’s Portal.”.

15. To add Clause 3, Article 20 as follows:

“3. In case where a representative office does not request for extension of the operation period according to the State Bank’s regulations, or already requested for extension but had no writing approval from the State Bank branch, within seven (07) working days after the expiration of license, the State Bank branch shall be responsible for publishing the expiration of the representative office s operation period on its website (if any) and send the notice on such expiration to the People’s Committee and the State Bank branch in service of the state management, and publish it on the State Bank’s Portal.”.

16. To amend and supplement Article 21 as follows:

“Article 21. Responsibilities of related units

1. Credit institutions, foreign bank branches and representative offices shall be responsible for providing adequate and truthful information on their actual organization and operation; and observe the reporting regime and other regulations concerning the asset liquidation, dissolution and license revocation in accordance with this Circular.

2. The Banking Supervision Department shall be responsible for responding to recommendations related to the process of asset liquidation, dissolution and license revocation of credit institutions and foreign bank branches specified in Clause 1, Article 3a of this Circular, which fall beyond the competence of liquidation supervision teams; and propose the Governor to consider and settle matters falling beyond their competence and related to the process of liquidation of assets, dissolution and revocation of licenses of credit institutions and foreign bank branches.

3. The State Bank branch shall be responsible for handling recommendations related to the process of liquidation of assets, dissolution and revocation of licenses of foreign bank branches and representative offices specified in Clause 2, Article 3a of this Article, which fall beyond the competence of liquidation supervision teams; assign a representative to participate in the liquidation supervision team, for the case of revoking licenses prescribed in Clause 1, Article 3a of this Circular upon request; and propose the Governor to consider and settle matters falling beyond their competence and related to the process of liquidation of assets, dissolution and revocation of licenses of foreign bank branches; and the process of revocation of licenses of representative offices; to consult at request of the Banking Supervision Agency in accordance with Point b(i), Clause 1, Article 7 of this Circular.

4. The State Bank branches in localities where head offices of credit institutions are located and the State Bank branches in localities where branches of credit institutions are located shall coordinate with the Banking Supervision Agency in liquidating assets, dissolving and revoking licenses of credit institutions.

5. Relevant Authorities, Departments and units of the State Bank shall be responsible for consulting at request of the Banking Supervision Agency and the State Bank branch according to the time limit specified in Articles 7 and 18 of this Circular.”.

Article 2.

1. To replace the phrase “the State Bank branch of the province or city where there is no Banking Supervision Department or the provincial-level Banking Supervision Department” at Points b, c and d, Clause 2, Article 7, and Clause 2, Article 12 of the Circular No. 24/2017/TT-NHNN and the phrase “the State Bank branch of the province or city where there is no Banking Supervision Department, provincial-level Banking Supervision Department” in Clauses 4, 5 and 6, Article 17 of the Circular No. 24/2017/TT-NHNN by the phrase “the Banking Supervision Agency or the State Bank branch”.

2. To replace the phrase “A report on asset valuation and price appraisal and enterprise

valuation” at Point dd, Clause 4, Article 7 of the Circular No. 24/2017/TT-NHNN by the phrase “A report on asset valuation and determine the value of owner’s equity of the enterprise”.

3. To replace the phrase “the State Bank” at Point a, Clause 1, Article 9 and Point a, Clause 2, Article 14 of the Circular No. 24/2017/TT-NHNN by the phrase “the State Bank or the State Bank branch”.

4. To replace the phrase “Point d(i)” in Clause 1, Article 9 of the Circular No. 24/2017/TT-NHNN by the phrase “Point dd(i)”.

5. To replace the phrase “the Governor of the State Bank (hereinafter referred to as the Governor)” in Article 6 of the Circular no. 24/2017/TT-NHNN and the phrase “the Governor” in Clause 1, Article 14, and Clause 3, Article 17 of the Circular No. 24/2017/TT-NHNN by the phrase “the Governor or the Director of the State Bank branch”.

6. To replace the phrase “liquidation completion” at Points b, c and d, Clause 2, Article 7, Clause 2, Article 12, and Article 13 of the Circular No. 24/2017/TT-NHNN by the phrase “liquidation termination”.

7. To repeal Point dd, Clause 2, Article 7 and Clause 3, Article 12 of the Circular No. 24/2017/TT-NHNN.

Article 3. Responsibility for implementation organization

The Chief of the Office, the Chief of the Banking Supervision Agency, heads of units of the State Bank, Directors of the State Bank branches or provinces and centrally-run cities, credit institutions, foreign bank branches, and representative offices of foreign credit institutions and other foreign institutions engaged in banking activities shall be responsible for organizing the implementation of this Circular.

Article 4. Effect

This Circular takes effect on December 17, 2020./.