Circular 25/2019/TT-NHNN amend Circular 40/2011/TT-NHNN operation of commercial banks in Vietnam

CIRCULAR

Amending and supplementing a number of articles of the Governor of the State Bank of Vietnam’s Circular No. 40/2011/TT-NHNN of December 15, 2011, providing the licensing, organization and operation of commercial banks, foreign bank branches, and representative offices of foreign credit institutions and other foreign institutions engaged in banking activities in Vietnam^[1]

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

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

Pursuant to the Government’s Decree No. 26/2014/ND-CP of April 7, 2014, on the organization and operation of banking supervision units; and the Government’s Decree No. 43/2019/ND-CP of May 17, 2019, amending and supplementing a number of articles of the Government’s Decree No. 26/2014/ND-CP of April 7, 2014, on the organization and operation of banking supervision units;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017, 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 amending and supplementing a number of articles of the Governor of the State Bank of Vietnam’s Circular No. 40/2011/TT-NHNN of December 15, 2011, providing the licensing, organization and operation of commercial banks, foreign bank branches, and representative offices of foreign credit institutions and other foreign institutions engaged in banking activities in Vietnam.

Article 1. To amend and supplement a number of articles of the Governor of the State Bank of Vietnam’s Circular No. 40/2011/TT-NHNN of December 15, 2011, providing the licensing, organization and operation of commercial banks, foreign bank branches, and representative offices of foreign credit institutions and other foreign institutions engaged in banking activities in Vietnam (below referred to as Circular No. 40/2011/TT-NHNN)

1. To amend and supplement Article 3 as follows:

“Article 3. Competence to decide on grant of licenses

1. The State Bank Governor may decide to:

a/ Grant licenses for commercial banks and foreign bank branches;

b/ Renew licenses, and add operation contents to licenses for commercial banks and foreign bank branches which are subject to inspection and micro-prudential supervision by the Banking Supervision Agency.

2. Directors of the State Bank’s provincial-level branches may decide to:

a/ Renew licenses, and add operation contents to licenses for foreign bank branches which are headquartered in provinces and cities, except those specified at Point b, Clause 1 of this Article;

b/ Grant or modify licenses for representative offices.”

2. To amend and supplement Clause 2, Article 5 as follows:

“2. Order and procedures for granting an establishment license for a representative office:

a/ A foreign credit institution or another foreign institution engaged in banking activities shall make a license application dossier under Articles 13 and 18 of this Circular, and send it directly or by post to the State Bank’s branch in the province or centrally run city (below referred to as the State Bank’s branch) in which its representative office is to be based;

Within 30 days after receiving the dossier, the State Bank’s branch shall send a written confirmation of the receipt of a complete and valid dossier to the applicant. In case the dossier is incomplete or invalid, the State Bank’s branch shall send a written request to the applicant for dossier supplementation.

b/ Within 60 days after sending the written confirmation of receipt of a complete and valid dossier, the State Bank’s branch shall grant a license under regulations. In case of refusal to grant a license, it shall reply in writing to the applicant, clearly stating the reason.”

3. To amend and supplement Clause 8, Article 18 as follows:

“8. A document proving the present or future lawful right to use the office of the representative office.”

4. To add the following Section 5 to Chapter II:

“Section 5

MODIFICATION OF LICENSES REGARDING REPRESENTATIVE OFFICES’ CHANGES

Article 18d. General provisions on a representative office’s changes

1. A representative office shall make a dossier of request for modification of its license, and send it directly or by post to the State Bank’s branch under Point a, Clause 2, Article 18dd of this Circular for the following changes:

a/ Change of its name;

b/ Relocation of its office to another province or city;

c/ Extension of its operation duration.

2. A representative office shall send a written notice directly or by post to the State Bank’s branch of the locality in which it is based within 7 working days after occurrence of any the following changes:

a/ Change of its head;

b/ Relocation of its office within the same province or city;

c/ Change of the address of its office without being relocated.

3. A representative office shall make a dossier of request for modification of a license prescribed in Clause 1 of this Article in adherence to the principles specified in Article 13 of this Circular.

4. After having its license modified by the State Bank’s branch regarding the changes specified in Clause 1 of this Circular, a representative office shall:

a/ Register the changes with a competent state agency;

b/ Operate in the new location and terminate its operations in the former location within 6 months after having its license modified by the State Bank’s branch regarding the change specified at Point b, Clause 1 of this Circular;

c/ Publicize the changes in the State Bank’s media of communication and a Vietnamese printed daily for 3 consecutive issues or e-newspaper within 7 working days after having its license modified by the State Bank’s branch.

Article 18dd. Dossiers, order and procedures for modification of licenses regarding representative office’s changes

1. A dossier of request for modification of a license regarding the changes specified in Clause 1, Article 18d of this Circular must comprise:

a/ A written request for a change, signed by the at-law representative of the foreign credit institution or another foreign institution engaged in banking activities, including at least the following details:

(i) Current contents;

(ii) Contents expected to be changed. The change of name must comply with Clause 1, Article 23 of this Circular;

(iii) Reason for the change;

b/ A document proving reasons for the change (in case of changing the name); or a document proving the present or future lawful right to use the office in the new location (in case of relocation);

c/ The independently audited financial statement of the foreign credit institution or another foreign institution engaged in banking activities of the year preceding the year of dossier submission, and the overall report on operation of the representative office in case of extension of operation duration (stating the operation situation in 3 years preceding the year of dossier submission and the plan on operation in the next year).

2. Order and procedures for modification of a license:

a/ A representative office shall make a dossier and submit it to the State Bank’s branch of the locality in which it is based in case of change of its name or extension of its operation duration, or submit the dossier to the State Bank’s branch of the locality to which it is expected to move in case of relocation. In case of extension of operation duration, a dossier shall be submitted at least 60 days before the license expires;

b/ In case the dossier is incomplete or invalid, within 5 working days after receiving it, the State Bank’s branch shall send a written request to the representative office for dossier supplementation;

c/ Within 30 days after receiving a complete and valid dossier, the State Bank’s branch shall issue a decision to modify the license regarding the change of the representative office. In case of refusal to issue such decision, it shall reply in writing, clearly stating the reason.”

 5. To add the following Points g and h to Clause 2, Article 36:

“g/ To act as the focal point for receiving and examining dossiers of request for renewal of licenses or addition of operation contents to licenses of commercial banks or foreign bank branches as prescribed at Point b, Clause 1, Article 3 this Circular, and submit these dossiers to the State Bank Governor;

h/ To send a document asking for opinions of related units of the State Bank on the request for addition of operation contents to the license regarding activities related to interest-rate derivatives, provision of commodity derivatives or securities depository activities.”

6. To amend and supplement Clause 8, Article 36 as follows:

“8. A State Bank’s branch:

a/ Within 30 days after receiving a written request from the Banking Supervision Agency, the State Bank’s branch of the locality in which the to-be-established commercial bank or foreign bank branch is expected to be headquartered shall examine the license application dossier and send written opinions to the Banking Supervision Agency;

b/ To discuss with the administration of the locality in which a commercial bank or foreign bank branch is expected to be headquartered on the establishment of the commercial bank or foreign bank branch in the locality (if any);

c/ To directly inspect, direct and supervise commercial banks and foreign bank branches in satisfying the conditions specified by law and the State Bank before they commence operation;

d/ To suspend commercial banks or foreign bank branches from commencing operation in case they fail to satisfy the conditions for operation commencement;

dd/ To report to the State Bank Governor on conditions for and situation of operation commencement of commercial banks and foreign bank branches;

e/ To receive and examine the dossiers prescribed in Articles 18 and18c and Clause 1, Article 18dd of this Circular;

g/ To send a document for opinions of the provincial-level People’s Committee of the locality in which a representative office is to be based on the following contents:

(i) Location of the representative office, for the grant of the representative office establishment license prescribed in Clause 2, Article 5 of this Circular;

(ii) Relocation of the representative office to another province or city as prescribed in Article 18dd of this Circular;

h/ To manage and archive license application dossiers after granting licenses;

i/ To receive written notices of the changes prescribed in Clause 2, Article 18d of this Circular from representative offices which are located in the locality;

k/ To notify the Ministry of Public Security (via the Economic Security Department) of heads of representative offices after granting representative office establishment licenses, or change of heads of representative offices after receiving written notices of representative office;

l/ To inspect representative offices which are based in the locality in accordance with law.”

Article 2

1. To replace the phrase “send it by post or directly to the State Bank (via the Banking Supervision Agency)” in Clause 1, Article 18b of Circular No. 40/2011/TT-NHNN (supplemented under Clause 3, Article 1 of the State Bank Governor’s Circular No. 17/2017/TT-NHNN of November 20, 2017, amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN), with the phrase “and send it directly or by post to the State Bank of Vietnam or the State Bank’s branch, for the case prescribed at Point a, Clause 2, Article 3 of this Circular”.

2. To remove the phrase “change of operation duration” in the title of Article 22 of Circular No. 40/2011/TT-NHNN.

3. To remove the phrase “representative office” at Point a, Clause 1, Article 35, and Point dd, Clause 2, Article 36, of Circular No. 40/2011/TT-NHNN.

4. To annul Clause 2, Article 22, and Point b, Clause 2, Article 36, of Circular No. 40/2011/TT-NHNN.

5. To remove the phrase “head of a representative office” at Point b, Clause 1, Article 35 of Circular No. 40/2011/TT-NHNN (amended and supplemented under Clause 16, Article 1 of the State Bank Governor’s Circular No. 28/2018/TT-NHNN of November 30, 2018, amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN).

6. To replace Appendix 01 to Circular No. 40/2011/TT-NHNN with Appendix 01 to this Circular, (including Appendix 01a (Form of commercial bank establishment and operation license), Appendix 01b (including Appendix 01b1 and Appendix 01b2 (Form of foreign bank branch establishment license), and Appendix 01c (Form of representative office establishment license).

7. To replace Appendix 02c to Circular No. 40/2011/TT-NHNN with Appendix 02c to this Circular.

Article 3. Transitional provision

For representative offices that have submitted dossiers of request for extension of operation duration but whose licenses expire before the effective date of this Circular, State Bank’s branches shall modify their licenses according their competence prescribed in this Circular.

Article 4. Implementation responsibility

The Chief of the Office, Chief of the Banking Supervision Agency, and heads of units of the State Bank, directors of the State Bank’s provincial-level branches, chairpersons of Boards of Directors or Members’ Councils, and directors general (directors) of commercial banks,  directors general (directors) of foreign bank branches, and heads of representative offices of foreign credit institutions and other foreign institutions engaged in banking activities shall organize the implementation of this Circular.

Article 5. Implementation provisions

1. This Circular takes effect on January 17, 2020.

2. This Circular annuls:

a/ Point b, Clause 4, Article 1, and Article 2, of the State Bank Governor’s Circular No. 17/2017/TT-NHNN of November 20, 2017, amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN;

b/ Clause 1, Article 1 of the State Bank Governor’s Circular No. 28/2018/TT-NHNN of November 30, 2018, amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN.-

For the State Bank Governor
Deputy Governor
NGUYEN THI HONG

* The appendices to this Circular are not translated.