Circular 27/2018/TT-NHNN on freezing, unfreezing capital and assets of foreign bank branches

CIRCULAR

Prescribing cases of freezing or unfreezing capital and assets of foreign bank branches[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. 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 prescribing cases of freezing or unfreezing capital and assets of foreign bank branches.

Article 1.Scope of regulation

This Circular prescribes cases of freezing or unfreezing capital and assets of foreign bank branches.

Article 2.Subjects of application

1. Foreign bank branches established and operating in the territory of Vietnam.

2. Organizations and individuals involved in the freezing or unfreezing of capital and assets of foreign bank branches.

Article 3.Interpretation of terms

1. Freezing of capital and assets means the performance by the State Bank of Vietnam (below referred to as the State Bank) of one or several of the following measures:

a/ Requesting a foreign bank branch not to transfer its capital and assets abroad;

b/ Freezing a foreign bank branch’s capital and assets deposited at the State Bank;

c/ Requesting a foreign bank branch to deposit its capital and assets at the State Bank and freezing such capital or assets;

d/ Requesting the credit institution at which a foreign bank branch’s capital and assets are deposited to freeze such capital or assets;

dd/ Requesting a foreign bank branch to deposit its capital and assets at a credit institution and requesting such credit institution to freeze the foreign bank branch’s capital and assets.

2. Parent bank means a foreign bank that opens a branch in Vietnam.

Article 4.Principles of freezing and unfreezing of capital and assets

1. The freezing or unfreezing of capital and assets of foreign bank branches aims to protect the depositors’ interests.

2. The State Bank Governor shall consider and decide on the freezing of capital and assets of a foreign bank branch when such foreign bank branch falls into a case specified in Article 5 of this Circular. A decision to freeze a foreign bank branch’s capital and assets must state the reason for freezing, starting time for freezing, freezing method and responsibility of the foreign bank branch.

3. The State Bank Governor shall consider and decide on the unfreezing of capital and assets of a foreign bank branch when such foreign bank branch falls in a case specified in Article 6 of this Circular. A decision to unfreeze a foreign bank branch’s capital and assets must the state the time of unfreezing and responsibility of the foreign bank branch.

Article 5.Cases of freezing capital and assets

The State Bank shall consider and decide on the freezing of a foreign bank branch’s capital and asset in the following cases:

1. The real value of allocated capital of the foreign bank branch is smaller than its legal capital for more than 6 consecutive months.

2. The foreign bank branch fails to reach or maintain the prudential ratios in banking operations prescribed in Article 130 of the Law on Credit Institutions and is requested in writing by the State Bank to address its failure but still fails to devise a measure to address or to complete addressing its failure within the time limit prescribed by the State Bank.

3. The accumulated loss incurred by the foreign bank branch exceeds 50% of its allocated capital and reserve funds stated in its latest audited financial statement.

4. The parent bank fails to fulfill its committed obligations toward its branch in Vietnam as requested by the State Bank.

5. It is notified that the parent bank shows a sign of insolvency or is put under special control by a competent agency of its country of origin or is ordered to undergo dissolution, liquidation or bankruptcy or has its establishment and operation license revoked.

Article 6.Cases of unfreezing capital and assets

The State Bank shall consider and decide on the unfreezing of a foreign bank branch’s capital and assets in the following cases:

1. The foreign bank branch has addressed its violation mentioned in Clause 1, 2 or 3, Article 5 of this Circular.

2. The parent bank has fulfilled its committed obligations toward its branch in Vietnam as requested by the State Bank as mentioned in Clause 4, Article 5 of this Circular.

3. The State Bank receives information from a competent agency of the parent bank’s country of origin that the parent bank has addressed the violation mentioned in Clause 5, Article 5 of this Circular.

Article 7.Responsibilities of a foreign bank branch

1. To provide adequate, accurate and timely information and documents about its organization and operation when so requested by the State Bank, in case it falls into a case of freezing capital and assets specified in Article 5 of this Circular.

2. To abide by the State Bank’s decision in case its capital and assets are frozen.

Article 8.Responsibilities of a credit institution requested by the StateBank to freeze a foreign bank branch’s capital and assets

To freeze or unfreeze a foreign bank branch’s capital and assets under the State Bank’s decisions.

Article 9.Responsibilities of the units of the State Bank

1. The Banking Supervision Agency shall:

a/ Act as the focal point in receiving relevant information and submitting it to the Governor for consideration and decision on freezing or unfreezing of capital and assets of foreign bank branches;

b/ To assume the prime responsibility for, and coordinate with the units of the State Bank in, addressing problems arising in the process of freezing or unfreezing of capital and assets of foreign bank branches.

2. The Operations Center shall freeze or unfreeze capital and assets of foreign bank branches under the State Bank’s decisions.

3. The Finance and Accounting Department shall act as the focal point in guiding accounting operations in the process of freezing or unfreezing of capital and assets of foreign bank branches.

4. The units of the State Bank shall:

a/ Provide information to the Banking Supervision Agency when detecting a foreign bank branch that falls into a case of freezing of capital and assets specified in Article 5 of this Circular;

b/ Coordinate with the Banking Supervision Agency in addressing problems arising in the process of freezing or unfreezing of capital and assets of foreign bank branches.

Article 10.Effect

1. This Circular takes effect on January 10, 2019.

2. To annul Section VI, Part II of the State Bank Governor’s Circular No. 03/2007/TT-NHNN of June 5, 2007, guiding the implementation of a number of articles of the Government’s Decree No. 22/2006/ND-CP of February 28, 2006, on organization and operation of foreign bank branches, joint-venture banks, banks with 100% foreign capital, and representative offices of foreign credit institutions in Vietnam.

Article 11.Organization of implementation

The Chief of the Office, the Chief of the Banking Supervision Agency, and heads of related units of the State Bank, directors of the State Banks’s provincial-level branches, and directors general (directors) of foreign bank branches shall organize the implementation of this Circular.-

For the State Bank Governor
Deputy Governor
NGUYEN DONG TIEN