Circular 28/2021/TT-NHNN amending Circular 40/2011/TT-NHNN providing the licensing, organization and operation of commercial banks, foreign bank branches

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, 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. 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 Circular No. 40/2011/TT-NHNN of December 15, 2011, providing the licensing, organization and operation of commercial banks, foreign bank branches, 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 Circular No. 40/2011/TT-NHNN

1. To amend and supplement Point b, Clause 2, Article 10 as follows:

“b/ Having international operation experience, being rated by an international credit rating agency as follows:

(i) Reaching the level of stable prospects or higher;

(ii) Earning a credit rating of AA or higher (on Standard & Poor’s or Fitch Ratings scale) or Aa3 or higher (on Moody’s scale). In case the international credit rating agency applies a credit rating scale other than that of Standard & Poor’s or Moody’s or Fitch Ratings, the international credit rating agency shall convert credit ratings to respective ones in conformity with the credit rating scale of Standard & Poor’s or Moody’s or Fitch Ratings.”

2. To amend and supplement Clause 3, Article 18a (supplemented under Clause 3, Article 1 of the Governor of the State Bank of Vietnam’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) as follows:

“3. Commercial banks and foreign bank branches may carry out the operations specified in Clause 26, Article 4 of the Form of the license for establishment and operation of commercial bank (Appendix 01a) and Clause 24, Article 4 of the Form of the license for establishment of foreign bank branch (Appendix 01b) after obtaining the State Bank’s approval; procedures for adding these operation contents to licenses must comply with the State Bank’s specific regulations and relevant laws.”

3. To add Article 19a below Article 19 as follows:

“Article 19a. Operations under the law on securities

1. Commercial banks and foreign bank branches may act as corporate bond issuance agents in the domestic market and collateral management agents in issuance of corporate bonds on the domestic market if their State Bank-granted licenses cover agent operations in the fields related to banking activities and asset management. In case a commercial bank or foreign bank branch that acts as a corporate bond issuance agent on the domestic market commits with investors that it will redeem corporate bonds from investors, it must sign contracts with investors (clearly specifying conditions and terms on redemption of bonds) and, when implementing these commitments, comply with the State Bank’s regulations on purchase and sale of corporate bonds by credit institutions and foreign bank branches and prudential limits and ratios in banking activities.

2. Commercial banks and foreign bank branches may purchase and sell government bonds on the stock market if their State Bank-granted licenses cover the operation of purchase and sale of government bonds.

3. Commercial banks and foreign bank branches may provide trading clearing and payment services for securities transactions under Point a, Clause 4, Article 56 of the Law on Securities, and supervisory banking activities and securities depository activities under the law on securities if their State Bank-granted licenses cover such operations and they satisfy the conditions prescribed by law on securities and securities market as follows:

a/ For the provision of trading clearing and payment services for securities transactions under Point a, Clause 4, Article 56 of the Law on Securities: the commercial banks and foreign bank branches must be granted by the State Securities Commission a certificate of eligibility for provision of securities clearing and payment services and approved by the Vietnam Securities Depository and Clearing Corporation to become a clearing member;

b/ For supervisory banking activities under the law on securities: the commercial banks must be granted by the State Securities Commission a securities depository registration certificate;

c/ For securities depository activities: the commercial banks and foreign bank branches must be granted by the State Securities Commission a securities depository registration certificate and approved by the Vietnam Securities Depository and Clearing Corporation to become a depository member.

4. The addition of the operation of the provision of clearing and payment services for securities transactions under Point a, Clause 4, Article 56 of the Law on Securities to the licenses of commercial banks or foreign bank branches must take the form of the State Bank’s written approval as specified at Point d, Clause 1, Article 152 of the Government’s Decree No. 155/2020/ND-CP of December 31, 2020, detailing a number of articles of the Law on Securities.

5. For operations related to securities and the securities market, commercial banks and foreign bank branches shall comply with the law on securities and the securities market and related laws.”

4. To add Point m to Clause 8, Article 36 (revised under Clause 6, Article 1 of the Governor of State Bank of Vietnam’s Circular No. 25/2019/TT-NHNN of December 2, 2019, amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN) as follows:

“m/ To send a document, enclosed with the dossier, to related units of the State Bank of Vietnam to seek the latter’s opinion on the request for addition of operations related to interest-rate derivatives, provision of commodity derivative products and securities depository activities to licenses.”

5. To amend and supplement Clause 11, Article 36 (supplemented under Point c, Clause 4, Article 1 of Circular No. 17/2017/TT-NHNN) as follows:

“11. Within 10 days after receiving the Banking Supervision Agency’s request for opinion on the addition of operations related to interest-rate derivatives, provision of commodity derivative products and securities depository to the license of a commercial bank or foreign bank branch, related units of the State Bank shall give their written opinions, clearly stating whether they approve or disapprove the dossier of the commercial bank or foreign bank branch”.

Article 2. To replace Appendix 01a and Appendix 01b to Circular No. 40/2011/TT-NHNN (which have been previously replaced under Clause 6, Article 2 of Circular No. 25/2019/TT-NHNN) with Appendix 01a and Appendix 01b to this Circular.

Article 3. Organization of implementation

The Chief of the Office, the Chief of the Banking Supervision Agency, and heads of units of the State Bank, commercial banks, foreign bank branches, representative offices of foreign credit institutions, and foreign institutions engaged in banking activities shall implement this Circular.

Article 4. Implementation provisions

This Circular takes effect on March 1, 2022.-

For the Governor of the State Bank
Deputy Governor
DOAN THAI SON

* The appendices to this Circular are not translated.