Circular No. 21/2013/TT-NHNN of September 9, 2013, providing for the operational network of commercial banks

THE STATE BANK OF VIETNAM

Circular No. 21/2013/TT-NHNN of September 9, 2013, providing for the operational network of commercial banks

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 November 29, 2005 Law No. 60/2005/QH11 on Enterprises;

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;

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

The Governor of the State Bank of Vietnam promulgates the Circular providing for the operational network of commercial banks.

Chapter 1

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular prescribes procedures for the establishment, change of names and locations, termination of operation or dissolution of domestic branches, transaction offices, representative offices and non-business units and overseas branches, representative offices and banks with 100% capital of commercial banks.

Article 2. Subjects of application

1. Commercial banks.

2. Organizations and individuals involved in the establishment, change of names and  locations, termination of operation or dissolution of domestic branches, transaction offices, representative offices and non-business units and overseas branches, representative offices and banks with 100% capital of commercial banks.

Article 3. Interpretation of terms

In this Circular, the below terms are construed as follows:

1. Operational network of a commercial bank includes domestic branches, transaction offices, representative offices and non-business units and overseas branches, representative offices and banks with 100% capital of the commercial bank.

2. Branch means a dependent unit of a commercial bank which applies dependent accounting, has a seal and is assigned to perform one or some functions of a commercial bank in accordance with law.

3. Transaction office means a dependent unit of a commercial bank which is managed by a domestic branch of the commercial bank, applies dependent accounting, has a seal, and is located in the same province or centrally run city where the head office of its managing branch is located. A transaction office may not:

a/ Decide on credit extension to a customer exceeding VND two (2) billion or an equivalent in a foreign currency, unless the whole credit extension is guaranteed by money, savings cards or valuable papers issued by its commercial bank, government bonds or state treasury bills;

b/ Provide the service of international payment.

4. Representative office means a dependent unit of a commercial bank which has a seal and performs the representative function under authorization of the commercial bank. A representative office may not conduct business operation.

5. Non-business unit means a dependent unit of a commercial bank which has a seal and conducts one or some activities to support the business operation of the commercial bank including:

a/ Researching and applying banking technologies to the commercial bank;

b/ Training and improving professional and technical skills for managers and staff of the commercial bank;

c/ Operating as a liaison  office; conducting market research and survey;

d/ Storing the database, collecting and processing information to serve the business operation of the commercial bank;

e/ Carrying out other activities supporting the business operation of the commercial bank in accordance with law.

6. Transaction centers, savings funds and transaction points are units established under regulations of the State Bank before this Circular takes effect.

7. Overseas bank with 100% capital is a type of subsidiary company of which 100% charter capital is owned by a Vietnamese commercial bank, which has the legal person status and is established overseas in accordance with the host country’s law.

8. State Bank branch means a branch of the State Bank in a province or centrally run city.

9. Request time means the date stated in the written request for establishment of a domestic branch, transaction office, representative office or non-business unit; an overseas branch, representative office or bank with 100% capital of a commercial bank.

10. Hanoi inner area covers the urban districts of Hanoi city.

11. Hanoi suburban area covers the remaining areas of Hanoi city outside Hanoi inner area stated in Clause 10 of this Article.

12. Ho Chi Minh City inner area covers the urban districts of Ho Chi Minh City.

13. Ho Chi Minh City suburban area covers the remaining areas of Ho Chi Minh City outside Ho Chi Minh City inner area stated in Clause 12 of this Article.

14. Procedures for approval of establishment of domestic transaction offices and branches of commercial banks include the procedures for approval of eligibility to establish transaction offices and branches prescribed in Chapter 2 and procedures for approval of eligibility to inaugurate activities of transaction offices and branches prescribed in Chapter 3 of this Circular.

Article 4. Competence of the Governor of the State Bank

1. Pursuant to this Circular and in line with the objectives of monetary policy administration in each period, the Governor of the State Bank may approve or disapprove commercial banks’ establishment, termination of operation or dissolution of domestic branches, transaction offices, representative offices, non-business units; and establishment of overseas branches, representative offices and banks with 100% capital.

2. Pursuant to this Circular and in line with the objectives of monetary policy administration in each period, the Governor of the State Bank may authorize directors of State Bank branches to approve or disapprove commercial banks’:

a/ Change of names and locations of head offices of domestic branches and transaction offices in the localities;

b/ Termination of operation of transaction offices in the localities (in case of voluntary operation termination);

c/ Change of branches managing transaction offices in the localities;

d/  Eligibility for inaugurating activities of domestic branches and transaction offices of commercial banks in the localities.

3. In some specific cases, to serve the objectives of socio-economic, political, security, national defense, foreign affairs development and monetary policy administration in each period, the Governor of the State Bank may consider and request establishment of domestic branches, representative offices, non-business units and transaction offices; and overseas branches, representative offices and banks with 100% capital of commercial banks on the basis of ensuring the sequence and procedures prescribed in this Circular and in conformity with actual conditions.

Article 5. Principles of making dossiers

1. Commercial banks shall make dossiers in Vietnamese. Copies in Vietnamese and Vietnamese translations must be certified by competent agencies in accordance with law.

2. Documents of commercial banks which are sent to the State Bank and its branches as prescribed in this Circular must be signed by at-law representatives or persons authorized by at-law representatives of commercial banks. Authorization by at-law representatives must be made in writing in accordance with law.

3. Dossiers of commercial banks may be sent to the State Bank or its branches directly or by post.

Chapter II

APPROVAL OF ELIGIBILITY TO ESTABLISH DOMESTIC BRANCHES AND TRANSACTION OFFICES, APPROVAL OF ESTABLISHMENT OF DOMESTIC REPRESENTATIVE OFFICES AND NON-BUSINESS UNITS; OVERSEAS BRANCHES, REPRESENTATIVE OFFICES AND BANKS WITH 100% CAPITAL OF COMMERCIAL BANKS

Article 6. Conditions for establishment of domestic branches of commercial banks

To be permitted to establish domestic branches, commercial banks must fully meet the following conditions:

1. For commercial banks which have operated for 12 months or more (counted from the date of inaugurating operation to the time of request):

a/ The actual value of charter capital at the time of December 31 of the year preceding the request year is not lower than the legal capital;

b/ The business operation is profitable according to the audited consolidated financial statement and separate financial statements of the year preceding the request year;

c/ Complying with limitations to ensure operational safety of credit institutions specified in Articles 126, 127, 128 and 129; Clause 1, Article 130, and Article 135 of the Law on Credit Institutions and the guidance of the State Bank concerning these provisions during 12 consecutive months before the request month;

d/ Properly and fully implementing regulations on classification of debts and setting up of risk provisions in accordance with regulations of the State Bank; the ratio of non-performing loans to total outstanding loans at the time of December 31 of the year preceding the request year does not exceed 3% or another ratio as decided by the Governor of the State Bank in each period;

dd/ At the time of request, the Board of Directors, Members’ Council and Control Board are staffed and structured in accordance with law, without lacking the general director;

e/ At the request time, the commercial bank has an internal audit division and internal control system as prescribed in Articles 40 and 41 of the Law on Credit Institutions and relevant current laws;

g/ Not being subject to the ban on network expansion as prescribed by the law on post-supervision handling of credit institutions and foreign bank branches;

h/ Meeting the condition on the number of branches permitted for establishment prescribed in Article 7 of this Circular;

i/ Submitting a valid and complete dossier as prescribed in this Circular.

2. For commercial banks which have operated for less than 12 months (counted from the date of inaugurating operation to the request time):

a/ The actual value of charter capital at the request time is not lower than the legal capital;

b/ The business operation is profitable by the request time;

c/ Complying with limitations to ensure operational safety of credit institutions specified in Articles 126, 127, 128 and 129; Clause 1, Article 130, and Article 135 of the Law on Credit Institutions and the guidance of the State Bank concerning these provisions continuously from the time of operation inauguration to the request time;

d/ Properly and fully implementing regulations on classification of debts and setting up of risk provisions in accordance with regulations of the State Bank; the ratio of non-performing loans to total outstanding loans at the time of December 31 of the year preceding the request year does not exceed 3% or another ratio as decided by the Governor of the State Bank in each period;

e/ Complying with Points dd, e, g, h and i, Clause 1 of this Article.

Article 7. Number of branches permitted for establishment

1. The number of branches a commercial bank is permitted to establish must ensure:

VND 300 billion x N1 + VND 50 billion x N2 < C

In which:

- C means the actual value of charter capital of the commercial bank by the request time (calculated in VND billion).

- N1 means the number of branches which have been established and requested for establishment in Hanoi and Ho Chi Minh City inner areas.

- N2 means the number of branches which have been established and requested for establishment in Hanoi and Ho Chi Minh City suburban areas and other provinces and centrally run cities.

2. A commercial bank may establish 10 branches at most in Hanoi inner area or Ho Chi Minh City inner area.

3. Commercial banks which have operated for less than 12 months (counted from the date of inaugurating operation to the request time) may establish no more than three (3) branches and these branches must not be located in the same province or centrally run city.

4. Commercial banks which have operated for 12 months or more (counted from the date of inaugurating operation to the request time) may establish no more than five (5) branches in one (1) financial year.

5. When a commercial bank closes branches in Hanoi inner area or Ho Chi Minh City inner area, it may establish branches in other provinces and centrally run cities with a number equal to that of closed branches, apart from the maximum number of branches permitted for establishment in one (1) year specified in Clause 4 of this Article.

Article 8. Conditions for establishment of overseas branches and banks with 100% capital

In order to establish overseas branches and banks with 100% capital; commercial banks must fully meet the following conditions:

1. The conditions specified in Clause 1, Article 6 of this Circular (except Points b and h, Clause 1 of Article 6).

2. The minimum operational duration is three (3) years, counted from the date of inaugurating operation to the request time.

3. The total assets reach at least VND 100,000 billion according to the audited consolidated financial statement at the time of December 31 of the year preceding the request year.

4. The business operation is profitable according to the audited consolidated financial statement and separate financial statements of the three (3) years preceding the request year.

Article 9. Conditions for establishment of domestic representative offices and non-business units and overseas representative offices

In order to establish domestic representative offices or non-business units and overseas representative offices, commercial banks must fully meet the following conditions:

1. The minimum operational duration is 12 months counted from the date of inaugurating operation to the request time.

2. The conditions specified at Points dd, e and i, Clause 1, Article 6 of this Circular.

3. For the establishment of representative offices, apart from meeting the conditions specified in Clauses 1 and 2 of this Article, commercial banks must meet the condition specified at Point g, Clause 1, Article 6 of this Circular.

Article 10. Conditions for establishment of transaction offices

In order to establish transaction offices, commercial banks must fully meet the following conditions:

1. The conditions specified in Clause 1, Article 6 of this Circular.

2. The branch expected to manage the transaction office must meet the following conditions:

a/ The minimum operational duration is 12 months counted from the date of inaugurating operation to the request time;

b/ The ratio of non-performing loans to total outstanding loans at the time of December 31 of the year preceding the request year does not exceed 3% or another ratio as decided by the Governor of the State Bank in each period;

c/ Not having been fined for administrative violations in the monetary and banking field during 12 months before the request time.

3. Meeting the condition on the number of transaction offices permitted for establishment specified in Article 11 of this Circular.

Article 11. Number of transaction offices permitted for establishment

1. The number of transaction offices of a commercial bank in Hanoi inner area and Ho Chi Minh City inner area does not exceed twice that of its existing branches in each of these areas.

2. The number of transaction offices of a commercial bank in Hanoi suburban area and Ho Chi Minh City suburban area and in other provinces and centrally run cities does not exceed triple that of its existing branches in each of these areas.

3. Commercial banks may decide on the number of transaction offices managed by a single branch in line with the management capacity of each branch and Clauses 1 and 2 of this Article.

Article 12. Dossier of request for approval of eligibility to establish domestic branches and transaction offices, approval of establishment of domestic representative offices and non-business units; overseas branches, representative offices and banks with 100% capital

1. The commercial bank’s written request for the State Bank’s approval of eligibility to establish domestic branches or transaction offices; approval of establishment of domestic representative offices or non-business units; overseas branches, representative offices or banks with 100% capital (according to the form in Appendix No. 1 to this Circular).

2. The resolution of the Board of Directors or Members’ Council on the establishment of domestic branches, transaction offices, representative offices or non-business units; overseas branches or representative offices, which, for establishment of transaction offices, must clearly state the name and address of the head office and the branch expected to manage the transaction office, professional operations the transaction office will perform, the geographical scope of operation and major customers.

3. The resolution of the Shareholders’ General Meeting (for joint-stock commercial banks); the resolution of the Members’ Council (for limited liability commercial banks with two members or more); or the approval opinion of the owner (for single-member limited liability commercial banks) adopting the establishment of overseas banks with 100% capital.

4. The scheme on establishment of each domestic branch, which must contain at least the following details:

a/ Full name in Vietnamese; abbreviated name in Vietnamese; address; content of operation; major customers;

b/ Reason for establishment and reason for selecting the locality for establishment;

c/ Organizational structure: organizational diagram showing the divisions of the branch;

d/ Feasibility study: Analysis of the business environment, target market, business opportunities to be seized and plan to occupy the market;

e/ Tentative business plan for the first three (3) years, which must contain at least the tentative accounting balance sheet; statement on business result; grounds for formulating the plan and explanation about the ability to perform the plan in each year.

5. The scheme on establishment of an overseas branch or bank with 100% capital must contain at least the following details:

a/ Full name in Vietnamese and a foreign language; abbreviated name in Vietnamese and a foreign language (if any);

b/ Location (name of host country and specific address (if any));

c/ The capital to be allocated to the overseas branch or bank;

d/ Content of operation; operational duration; major customers;

dd/ Reason for establishment and reason for selecting the host country;

e/ Organizational structure and network: organizational diagram showing the head office and its divisions and other commercial presences of the overseas bank with 100% capital (if any);

g/ Relevant legal information: Listing the relevant regulations of the host country on  licensing of foreign credit institutions to establish and operate branches and banks with 100% capital in the host country (titles, serial numbers and dates of documents);

h/ Feasibility study: Analysis of the business environment, target market, business opportunities to be seized and plan to occupy the market;

i/ The control method of the commercial bank applicable to the overseas branch or bank with 100% capital, clearly stating at least the method (hiring external control or self-controlling) and reason for selecting the method; organization of implementation of the method; the estimated cost for implementing the method; expected difficulties and solutions;

k/ The tentative business plan for the first three (3) years, containing at least the tentative accounting balance sheet; statement on business result; statement of cash flow (for overseas banks with 100% capital); grounds for formulating the plan and explanation on the ability to implement the plan in each year;

l/ Expected impacts and efficiency of the establishment of the overseas branch or bank with 100% capital, problems (if any) in ensuring operational safety for the commercial bank and solutions; the minimum capital adequacy ratio, and limitations of capital contribution and share purchase limits after the overseas bank is established;

m/ The commercial bank’s handling plan and measures in case the overseas branch or bank with 100% capital exerts severe influences on the commercial bank.

6. Other documents proving the eligibility to establish domestic branches, transactions offices, representative offices and non-business units or overseas branches, representative offices and banks with 100% capital as prescribed in this Circular.

Article 13. Sequence of approving eligibility to establish domestic branches and transaction offices, approving the establishment of domestic representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital

1. Except the cases prescribed in Clause 3, Article 4 of this Circular, the State Bank shall consider and approve commercial banks’ eligibility to establish domestic branches and transaction offices; approve commercial banks’ establishment of domestic representative offices and non-business units; overseas branches, representative offices and banks with 100% capital once in a fiscal year. Commercial banks shall make dossiers as prescribed in Article 12 of this Circular and send them to the State Bank (the Banking Supervision Agency).

2. Within 10 working days after receiving a complete dossier as prescribed in Article 12 of this Circular, the Banking Supervision Agency shall send a written request to consult the following units:

a/ The State Bank branch of the locality where the commercial bank locates its head office for opinions assessing the commercial bank’s eligibility as prescribed in this Circular;

b/ The People’s Committee of the province or centrally run city for opinions assessing the necessity to add a branch in the locality (in case of request for opening domestic branches);

c/ The State Bank branch of the locality where the commercial bank plans to establish a domestic branch or transaction office for opinions assessing the necessity to add a branch or transaction office in the locality, and the eligibility as prescribed in this Circular of the branch expected to manage the transaction office in the locality (in case of request for establishment of a transaction office).

3. Within 14 working days after receiving a written request of the Banking Supervision Agency, the State Bank branch of the locality where the commercial bank locates its head office, the provincial-level People’s Committee and the State Bank branch of the locality where the commercial bank plans to establish a domestic branch or transaction office shall give their written opinions on the requested contents.

4. Within 20 days after receiving full opinions of the related units, the Banking Supervision Agency shall summarize these assessment opinions regarding the eligibility of the commercial bank and the branch expected to manage the transaction office (in case of request for establishment of a transaction office) as prescribed in this Circular, and submit them to the Governor for issuing a written approval or refusal for the commercial bank to establish a domestic branch or transaction office; approval or refusal for the commercial bank to establish a domestic representative office or non-business unit; an overseas branch, representative office or bank with 100% capital. In case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

5. Within 12 months after the Governor of the State Bank signs a document mentioned in Clause 4 of this Article, the commercial bank shall inaugurate operation of the domestic branch, transaction office, representative office or non-business unit which has been approved for establishment. Within 24 months after the Governor of the State Bank signs a document mentioned in Clause 4 of this Article, the commercial bank shall inaugurate operation of the overseas branch, representative office or bank with 100% capital which has been approved for establishment. Past this time limit, the written approval of the State Bank will automatically cease to be valid.

Chapter III

INAUGURATION OF OPERATION, CHANGE OF NAMES AND LOCATIONS OF DOMESTIC BRANCHES, TRANSACTION OFFICES, REPRESENTATIVE OFFICES AND NON-BUSINESS UNITS; AND OVERSEAS BRANCHES, REPRESENTATIVE OFFICES AND BANKS WITH 100% CAPITAL OF COMMERCIAL BANKS

Article 14. Approval of eligibility to inaugurate operation of domestic branches and transaction offices

1. Conditions

a/ Having the lawful ownership or use of head offices of branches or transaction offices; the head offices must ensure storage of documents (except transaction offices), be convenient and safe for transactions and assets, have complete security and guard systems and systems of uninterrupted power supply and communication meeting requirements of fire and explosion prevention and fighting;

b/ Head offices of branches have cash vaults up to safety standards prescribed by the State Bank. In case a commercial bank has more than one branch in the same province or centrally run city, the commercial bank must have at least a branch with cash vaults in accordance with regulations of the State Bank and shall transport cash from branches without cash vaults to the branch with cash vaults after the transaction hours of each working day;

c/ Branches and transaction offices have systems of information technology connected online to the head office and transaction offices connected online to their managing branches; ensure that the systems of information technology and the database operate continuously, safely, and confidentially for professional operations;

d/ Branches and transaction offices have sufficient minimum executives including branch director, deputy director, director of transaction office or equivalent titles, and professional staff;

e/ The director of the branch or equivalent titles (in case of inaugurating operation of branches) satisfies the standards and conditions prescribed in Clause 5, Article 50 of the Law on Credit Institutions.

2. Dossier

a/ The commercial bank’s written request for approval of eligibility to inaugurate operation of the branch or transaction office, clearly reporting the satisfaction of conditions for operation inauguration and indicating the location of the head office of the branch or transaction office;

b/ Documents proving the lawful ownership or use of the head office of the branch or transaction office;

c/ Papers relating to the personal identification of the branch director or equivalent titles, including the decision on appointment of the branch director; curriculum vitae; judicial record; diplomas and certificates proving his/her professional qualifications; the written comments of units operating in the banking and finance field where the branch director had ever worked (if any), which clearly show the title, contact address, full name and signature of the person giving comments.

3. Sequence

a/ At least 30 days before the date of inaugurating operation of a branch or transaction office, the commercial bank shall make 1 set of dossier as prescribed in Clause 2 of this Article clearly stating the expected date of inauguration, and send it to the State Bank branch of the locality where the head office of the branch or transaction office is located;

b/ Within 7 working days after receiving a complete dossier as prescribed in this Circular, the State Bank branch of the locality where the head office of the branch or transaction office is located shall verify and assess the satisfaction of conditions for operation inauguration, then issue a written approval or refusal for the commercial bank to inaugurate operation of the branch or transaction office. In case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

4. After receiving the State Bank branch’s written approval of eligibility for inaugurating operation of the branch or transaction office, the commercial bank shall make operation registration for the branch (for branches) or announce the setting up of the business location (for transaction offices), and publish such announcement in newspapers as prescribed by the law on enterprise registration and relevant current laws.

5. Commercial banks may inaugurate operation of branches and transaction offices after having carried out business registration procedures as prescribed in Clause 4 of this Article.

Article 15. Inauguration of operation of domestic representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital

1. Commercial banks may decide on the inauguration of operation of their domestic representative offices and non-business units, and at least 14 working days before the date of operation inauguration shall send a written report thereon to the State Bank (through the Banking Supervision Agency) and the State Bank branches of the localities where the head offices of domestic representative offices or non-business units are located.

2. Commercial banks may inaugurate operation of overseas branches, representative offices or banks with 100% capital in accordance with the host countries’ laws, and at least 14 working days before the date of operation inauguration shall send a written report thereon to the State Bank (through the Banking Supervision Agency).

Article 16. Change of names of domestic branches and transaction offices

1. Change of name of a branch

a/ Dossier

(i) The commercial bank’s written request for approval of change of the name of a branch, clearly stating the reason for the change and the expected new name;

(ii) The resolution of the Board of Directors or Members Council approving the change of the name of the branch.

b/ Sequence

(i) The commercial bank makes 1 set of dossier as prescribed in Clause 1 of this Article and sends it to the State Bank branch of the locality where the head office of the branch is located.

(ii) Within 5 working days after receiving a complete dossier as prescribed in this Circular, the State Bank branch shall issue a written approval or refusal of the request of the commercial bank; in case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

2. Change of name of transaction office

The commercial bank may decide on change of the name of a transaction office. Within 5 working days after the transaction office operates under the new name, the commercial bank shall send a written report on this change to the State Bank branch of the locality where the head office of the transaction office is located.

Article 17. Change of locations of head offices of domestic branches and transaction offices

1. Commercial banks may only change locations of head offices of their branches and transaction offices within a province or centrally run city.

2. Commercial banks may not change locations of their branches and transaction offices from Hanoi suburban area or Ho Chi Minh City suburban area to Hanoi inner area or Ho Chi Minh inner area.

3. When changing locations of head offices of branches or transaction offices, commercial banks must satisfy:

a/ Conditions: Conditions specified at Points a, b and c, Clause 1 Article 14 of this Circular.

b/ Dossier:

(i) The commercial bank’s written request for approval of change of the location of the head office of a branch or transaction office, clearly stating the satisfaction of the conditions specified at Point a of this Clause, indicating the new location of the head office of the branch or transaction office;

(ii) Documents proving the lawful ownership or use of the head office of the branch or transaction office.

4. Sequence:

a/ The commercial bank makes 1 set of dossier as prescribed in Clause 3 of this Article and sends it to the State Bank branch of the locality where the head office of branch or  transaction office is located;

b/ Within 10 working days after receiving a complete dossier as prescribed in this Circular, the State Bank branch of the locality where the head office of the branch or transaction office is located shall verify the expected new location of the head office of the branch or transaction office and issue a written approval or refusal of the change of location of the branch or transaction office. In case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

5. Within 12 months after the State Bank branch issues a written approval, the branch or transaction office of the commercial bank shall commence operation at the approved location. Past this time limit, the written approval of the State Bank branch will automatically cease to be valid.

Article 18. Change of names and locations of head offices of domestic representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital

Commercial banks shall decide on change of names, locations of head offices of domestic representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital; report in writing on the change to the State Bank (the Banking Supervision Agency), the State Bank branches of the localities where the head offices of commercial banks are located and the State Bank branches of the localities where domestic representative offices or non-business units (in case of changing names and locations of domestic representative offices or non-business units) within 5 working days after their domestic branches, representative offices or non-business unit; overseas branches, representative offices or banks with 100% capital operate under the new names or at the new locations of head offices.

In case of changing the location of the head office of a domestic representative office or non-business unit to a different province or centrally run city, a commercial bank shall report it to the State Banks branch of the locality where the head office of the representative office or non-business unit is previously located and the State Bank branch of the locality where the new head office of the representative office or non-business unit is located.

Article 19. Change of names of domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital in case of reorganization of commercial banks

The change of names of domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital in case of reorganization of commercial banks must comply with the guidance of the State Bank on reorganization of credit institutions.

Article 20. Change of branches managing transaction offices

1. Conditions

The branch expected to manage a transaction office must fully meet the conditions prescribed in Clause 2, Article 10 of this Circular.

2. Dossier

a/ The commercial bank’s written request for change of the branch managing the transaction office, including at least the following details:

(i) Reason for the change;

(ii) Name and location of the head office of the branch currently managing and branch expected to manage the transaction office;

(iii) Name and location of the head office of the transaction office requested for change of the managing branch.

b/ The resolution of the Board of Directors or Members’ Council adopting the change of the branch managing the transaction office.

3. Sequence

a/ The commercial bank makes 1 set of dossier as prescribed in this Circular and sends it to the State Bank branch of the locality where the head office of the branch is located;

b/ Within 14 working days after receiving a complete dossier as prescribed in this Circular, the State Bank branch of the locality where the head office of the branch is located shall issue a written approval or refusal of the request of the commercial bank. In case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

Article 21. Disclosure of information on change contents

Within 7 working days after receiving a written approval of the State Bank for effecting a change specified in Articles 16, 17 and 20 and from the date of effecting the change specified in Articles 18 and 19 of this Circular, the commercial bank shall disclose the change content on its website, at its head office and the head offices of its related domestic branches and transaction offices.

Chapter IV

TERMINATION OF OPERATION AND DISSOLUTION OF DOMESTIC BRANCHES, TRANSACTION OFFICES, REPRESENTATIVE OFFICES AND NON-BUSINESS UNITS; AND OVERSEAS BRANCHES, REPRESENTATIVE OFFICES AND BANKS WITH 100% CAPITAL OF COMMERCIAL BANKS

Article 22. Termination of operation and dissolution of domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital of commercial banks

1. Domestic branches, transaction offices, representative offices and non-business units will terminate operation or be dissolved in the following cases:

a/ Automatic operation termination or dissolution;

b/ Voluntary operation termination or dissolution;

c/ Forced operation termination or dissolution.

2. Overseas branches, representative offices or banks with 100% capital of commercial banks will terminate operation or be dissolved in accordance with the laws of the host countries where the head offices of overseas branches, representative offices or banks with 100% capital are located. Overseas branches or representative offices will automatically terminate operation or be dissolved in case their commercial banks terminate operation.

3. Commercial banks are responsible for:

a/ Dealing with assets, rights, obligations and related interests of domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital which terminate operation or are dissolved;

b/ Preserving documents and materials related to the operation termination or dissolution of domestic branches, transaction offices, representative offices or non-business units; and overseas branches, representative offices or banks with 100% capital;

c/ Carrying out legal procedures for terminating operation of or dissolving domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital in accordance with law.

Article 23. Automatic termination of operation and dissolution of domestic branches, transaction offices, representative offices and non-business units; and overseas branches and representative offices

1. Domestic branches, transaction offices, representative offices and non-business units; and overseas branches and representative offices will automatically terminate operation or be dissolved in case their commercial banks terminate operation or are dissolved.

2. The procedures for automatic termination of operation or dissolution of domestic branches, transaction offices, representative offices or non-business units; and overseas branches and representative offices comply with the law on termination of operation and dissolution of commercial banks.

Article 24. Voluntary termination of operation of domestic branches, transaction offices, representative offices and non-business units

1. A dossier of voluntary termination of operation of a domestic branch or transaction office:

a/ The commercial bank’s written request for termination of operation of the branch or  transaction office, clearly stating the reason;

b/ The resolution of the Board of Directors or Members’ Council of the commercial bank on the termination of operation of the branch or transaction office;

c/ The plan on dealing with assets, rights, obligations and related interests of the branch or transaction office which terminates operation.

2. Sequence of voluntary termination of operation of a domestic branch:

a/ The commercial bank makes one (1) set of dossier as prescribed in Clause 1 of this Article and sends it to the State Bank (the Banking Supervision Agency);

b/ Within 7 working days after receiving a complete dossier as prescribed in this Circular, the Banking Supervision Agency shall consult the State Bank branch of the locality where the head office of the branch expected to terminate operation is located;

c/ Within 14 working days after receiving a written request of the Banking Supervision Agency, the State Banks branch of the locality where the head office of the commercial bank’s branch expected to terminate operation is located shall give written opinions on the requested contents;

d/ Within 14 working days after receiving written opinions of the State Bank branch of the locality where the head office of the branch expected to terminate operation is located, the Banking Supervision Agency shall summarize opinions and propose the Governor of the State Bank to approve or refuse the request of the commercial bank. In case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

3. Sequence of voluntary termination of operation of transaction offices:

a/ The commercial bank makes 1 set of dossier as prescribed in Clause 1 this Article and sends it to the State Bank branch of the locality where the head office of the transaction office is located;

b/ Within 14 working days after receiving a complete dossiers as prescribed in this Circular, the State Bank branch of the locality where the head office of the transaction office is located shall issue a written approval or refusal of the request of the commercial bank. In case of refusal, it shall issue a written reply clearly stating the reason to the commercial bank.

4. Within 45 days after having the written approval of the State Bank as prescribed at Point d, Clause 2 of this Article, or of the State Bank branch of the locality where the head office of the transaction office is located as prescribed at Point b, Clause 3 of this Article, the commercial bank shall carry out legal procedures as prescribed by law to terminate operation of its branch or transaction office; send a written report on the date of operation termination to the State Bank (the Banking Supervision Agency - in case of terminating operation of branches) or the State Bank branch of the locality where the head office of the branch or transaction office (in case of terminating operation of transaction offices).

5. For voluntary termination of operation of representative offices or non-business units, within 5 working days after terminating operation of representative offices or non-business units, commercial banks shall send a written report clearly stating the reason for and date of operation termination to the State Bank (the Banking Supervision Agency), the State Bank branch of the locality where the head office of the commercial bank is located and the State Bank branch of the locality where the head office of the representative office or non-business unit is located.

Article 25. Forced termination of operation of domestic branches, transaction offices, representative offices and non-business units

1. The Governor of the State Bank may compel termination of operation of domestic branches, transaction offices, representative offices or non-business units of commercial banks.

2. Domestic branches, transaction offices, representative offices or non-business units of commercial banks may be compelled to terminate operation in either of the following cases:

a/ There is proof that the dossier of request for establishment of the branch, transaction office, representative office or non-business unit contains untrue information causing misleading assessment of the eligibility for establishment of the branch, representative office or non-business unit of the commercial bank;

b/ Operating inconsistently with the permitted operational content as prescribed by law.

3. Based on the cases defined at Points a and b, Clause 2 of this Article, the State Bank branch of the locality where the head office of the branch, transaction office, representative office or non-business unit of the commercial bank is located shall send a document clearly stating the reason to the State Bank (the Banking Supervision Agency) to request termination of operation of the branch, transactional office, representative office or non-business unit of the commercial bank.

4. Within 14 working days after receiving the document of the State Bank branch as prescribed in Clause 3 of this Article or during the course of inspection and supervision, if detecting a case defined at Point a or b, Clause 2 of this Article, the Banking Supervision Agency shall propose the Governor of the State Bank to issue a written request for the commercial bank to terminate operation of its branch, transaction office, representative office or non-business unit.

5. Within 90 days after the State Bank issues a document as prescribed in Clause 4 of this Article, the commercial bank shall terminate operation of the branch, transaction office, representative office or non-business unit; and send a written report on the date of operation termination to the State Bank.

6. If having a complaint about the request of the State Bank for termination of operation of its branch, transaction office, representative office or non-business unit, a commercial bank may carry out procedures for lodging such complaint in accordance with the current law on complaints.

Article 26. Termination of operation and dissolution of overseas branches, representative offices and banks with 100% capital

1. Commercial banks shall terminate the operation or dissolve their overseas branches, representative offices or banks with 100% capital in accordance with the laws of the host country and relevant Vietnamese laws.

2. Al least 14 working days before the date of termination of operation or dissolution of overseas branches, representative offices or banks with 100% capital, commercial banks shall send a written report to the State Bank (the Banking Supervision Agency), the State Bank branch of the locality where the head office of the commercial bank is located, clearly stating the reason for and time of operation termination or dissolution.

Article 27. Disclosure of information

Within 7 working days after the date of termination of operation or dissolution of domestic branches, transaction offices, representative offices or non-business units; overseas branches, representative offices or banks with 100% capital (except the case of automatic operation termination or dissolution under Article 23 of this Circular), commercial banks shall disclose and list publicly the operation termination or dissolution on their websites, at their head offices and the head offices of their branches managing the transaction offices (in case of terminating operation of transaction offices) and publish on central and local newspapers. Information to be publicly disclosed and published must at least include:

1. Names and addresses of domestic branches, transaction offices, representative offices or non-business units; overseas branches, representative offices or banks with 100% capital which are terminated in operation or dissolved.

2. Time of operation termination or dissolution.

3. Responsibilities of the commercial bank for assets, rights, obligations and related interests of domestic branches, transaction offices, representative offices or non-business units; overseas branches, representative offices or banks with 100% capital which are terminated in operation or dissolved.

Chapter V

ORGANIZATION OF IMPLEMENTATION

Article 28. Responsibilities of commercial banks

1. To have plans on development of domestic branches, transaction offices, representative offices and non-business units; overseas branches, representative offices and banks with 100% capital and submit them to competent banking authorities for approval annually.

2. Not later than January 31 and July 31 of every year, to report on contents according to Appendix No. 5 to this Circular to the State Bank (through the Banking Supervision Agency) and the State Bank branches of the localities where commercial banks locate their head offices.

3. To disclose information as prescribed in this Circular and at Point c, Clause 4, Article 29 of the Law on Credit Institutions.

4. To perform other contents defined in this Circular.

Article 29. Responsibilities of the State Bank branches of localities where commercial banks locate their head offices

1. To coordinate with other related State Bank branches in dealing with matters arising in the organization and operation of branches, transaction offices, representative offices and non-business units of commercial banks.

2. To perform other relevant contents as prescribed in this Circular.

Article 30. Responsibilities of State Bank branches of localities where commercial banks locate head offices of their branches, transaction offices, representative offices and non-business units

1. To be responsible before the Governor of the State Bank when performing duties under their competence defined in this Circular.

2. To coordinate with other State Bank branches of localities where commercial banks locate their head offices in dealing with matters arising in the organization and operation of branches, transaction offices, representative offices and non-business units of commercial banks in their localities.

3. To manage, inspect and supervise operation of branches, transaction office, representative office and non-business units of commercial banks in their localities.

4. To make written reports and propose the Governor of the State Bank to terminate operation of branches, transaction offices, representative offices or non-business units of commercial banks when occurs one of the cases specified in Clause 2 Article 25 of this Circular.

5. To report on relevant matters as prescribed in this Circular.

Article 31. Responsibilities of the Banking Supervision Agency

1. To act as the focal point to consider and submit to the Governor proposals for establishment, operation termination and dissolution of domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital of commercial banks in accordance with this Circular.

2. To act as the focal point to consider and submit to the Governor for dealing with matters arising in the establishment, operation termination and dissolution of domestic branches, transaction offices, representative offices and non-business units; and overseas branches, representative offices and banks with 100% capital of commercial banks.

3. To summarize reports of units as prescribed in this Circular.

Article 32. Responsibilities of related departments of the State Bank

Other departments of the State Bank shall give opinions on relevant issues as directed by the Governor of the State Bank at the proposal of the Banking Supervision Agency.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 33. Transitional provisions

1. Within 24 months after the effective date of this Circular, commercial banks shall review, make and finalize plans on adjustment of transaction centers, savings funds and transaction points as follows:

a/ Commercial banks shall transform transaction centers into branches according to Article 16 of this Circular on change of name; transform savings funds and transaction points into transaction offices on the basis of satisfying conditions, dossiers, sequence and procedures for establishment and operation inauguration of transaction offices prescribed in this Circular, except the conditions specified in Clause 3, Article 10; Clauses 1 and 2, Article 11, and Clause 1, Article 13 of this Circular;

b/ If failing to transform transaction centers, savings funds or transaction points as prescribed at Point a of this Clause, commercial banks may terminate the operation of these transaction centers, savings funds or transaction points; make a dossier according to Clause 1, Article 24 of this Circular; and follow the sequence of implementation defined in Clause 2, Article 24 of this Circular (for the termination of operation of transaction centers) and in Clause 3, Article 24 of this Circular (for the termination of operation of savings funds and transaction points).

c/ Commercial banks shall ensure that the transformation of transaction centers, savings funds and transaction points does not disrupt their activities and ensures the rights and lawful interests of related organizations and individuals.

2. Commercial banks which currently have a number of branches exceeding the maximum number prescribed in Clause 2, Article 7 of this Circular are not required to adjust the number of branches according to the provisions of this Circular.

3. Commercial banks which currently have a number of transaction offices exceeding the maximum number prescribed in Clauses 1 and 2, Article 11 of this Circular are not required to adjust the number of transaction offices according to the provisions of this Circular.

Article 34. Effect

This Circular takes effect on October 23, 2013, and replaces the Governor of the State Bank’s Decision No. 13/2008/QD-NHNN of April 29, 2008, promulgating the Regulation on the operational network of commercial banks.

Article 35. Organization of implementation

The Chief of the Office, the Chief of the Banking Supervision Agency, heads of related units under the State Bank of Vietnam, directors of State Bank branches in provinces and centrally run cities, and chairpersons of Boards of Directors, chairpersons of Members’ Councils and general directors (directors) of commercial banks shall implement this Circular.-

For the Governor of the State Bank
Deputy Governor
Dang Thanh Binh