Circular No. 40/2011/TT-NHNN dated December 15, 2011 of the State Bank of Vietnam regulating on licensing and organizations, operations of commercial banks, foreign bank branches, representative offices of foreign credit institutions and other foreign organizations with banking operations in Vietnam

THE STATE BANK OF VIETNAM

Circular No. 40/2011/TT-NHNN of December 15, 2011, providing the licencing, 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

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

Pursuant to the November 29, 2005 Law No. 59/2005/QH11 on Investment;

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;

The State Bank of Vietnam (below referred to as the State Bank) stipulates the licencing, 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 as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. Scope of regulation:

This Circular provides the licencing and some contents related to the 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.

2. Subjects of application include:

a/ Commercial banks;

b/ Foreign bank branches;

c/ Representative offices of foreign credit institutions and other foreign institutions engaged in banking activities in Vietnam (below referred to as representative offices);

d/ Organizations and individuals involved in the establishment, organization and operation of commercial banks, foreign bank branches and representative offices.

Article 2. Interpretation of terms

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

1. Licenses include license for establishment and operation of commercial banks, license for establishment of foreign bank branches and license for establishment of representative offices granted by the State Bank. The State Bank’s documents modifying or supplementing licenses constitute an integral part of such licenses.

2. Commercial bank means a type of bank allowed to conduct all banking activities and other business activities under the Law on Credit Institutions for profits.

3. Joint-stock commercial bank means a commercial bank established and organized as joint-stock company.

4. Wholly foreign-owned bank means a commercial bank established in Vietnam with 100% of its charter capital owned by a foreign credit institution; and being a Vietnam legal entity and headquartered in Vietnam. A wholly foreign-owned bank may be established and organized as a single-member limited liability company owned by a foreign bank or a limited liability company with two or more members, including a foreign bank owning 50% of its charter capital.

5. Joint-venture bank means a commercial bank established in Vietnam, with capital contributions of the Vietnam party (including one or more Vietnamese banks) and the foreign party (including one or more foreign banks) on the basis of a joint-venture contract; and being a Vietnam legal entity and headquartered in Vietnam. A joint-venture bank may be established and organized as a limited liability company with between two and five members, each member owning no more than 50% of its charter capital.

6. Foreign bank branch means a subsidiary of a foreign bank, which has no legal entity status and all of its obligations and commitments in Vietnam guaranteed by the foreign bank.

7. Representative office means a subsidiary of a foreign credit institution or another foreign institution engaged in banking activities. Representative offices may not conduct business activities in Vietnam.

8. Foreign credit institution means a credit institution established overseas under a foreign law.

9. Another foreign institution engaged in banking activities means an institution established overseas under a foreign law and allowed to regularly conduct or perform one or several of the following operations:

a/ Receiving deposits;

b/ Extending credit;

c/ Providing via-account payment services.

10. Initial capital-contributing shareholder means an institution or individual that owns at least one outstanding share issued by a joint-stock commercial bank at the time of its establishment.

11. Founding shareholder means an initial capital-contributing shareholder that participates in the elaboration and approval of and signs the first organization and operation charter of a joint-stock commercial bank.

12. First shareholders’ general meeting means a meeting of founding shareholders and other initial capital-contributing shareholders which is held after obtaining the State Bank’s in-principle approval and tasked to approve the organization and operation charter of the joint-stock commercial bank, elect members of the Board of Directors and the Control Board of the first term of office, and decide on other matters related to the establishment of the joint-stock commercial bank.

13. Capital-contributing member means a Vietnamese bank or foreign bank that contributes capital to a joint-venture bank; or a foreign credit institution that contributes capital to a wholly foreign-owned bank.

14. Founding member means a capital-contributing member that participates in the elaboration and approval of and signs the first organization and operation charter of a joint-venture or wholly foreign-owned bank.

15. First capital-contributing members’ meeting means a meeting of founding members and other capital-contributing members which is held after obtaining the State Bank’s in-principle approval and tasked to approve the organization and operation charter of the bank, elect members of the Members’ Council and the Control Board of the first term of office, and decide on other matters related to the establishment of the joint-venture or wholly foreign-owned bank being a limited liability company with two or more members.

16. Owner means an institution that owns the whole capital of a commercial bank being a single-member limited liability company.

17. Parent bank means a foreign bank applying for a license for a branch or having a branch in Vietnam.

18. Preparatory committee means a group of persons selected by founding shareholders, initial capital-contributing members, owner or parent bank and conducting activities related to the license application on behalf of founding shareholders, initial capital-contributing members, owner or parent bank. A preparatory committee must be composed of at least 2 members, one of whom is the head.

19. At-law representative of an institution means the chairman of the Board of Directors or the Members’ Council or director general (director) of such institution as stated in its charter.

20. Country of origin of a foreign credit institution or another foreign institution engaged in banking activities means a country in which such institution is established and headquartered.

Chapter II

PROVISIONS ON LICENSING

Section 1

GENERAL PROVISIONS

Article 3. Competence to decide on grant and revocation of licenses

1. The State Bank Governor may grant licenses under the Law on Credit Institutions, this Circular and relevant laws.

2. The State Bank Governor may revoke granted licenses in the cases specified in Article 28 of the Law on Credit Institutions. The revocation of licenses complies with regulations of the State Bank.

Article 4. Licenses

1. The State Bank shall specify banking activities and other business activities of commercial banks and foreign bank branches and activities of representative offices in their licenses, made according to the form provided in Appendix 1 to this Circular.

2. In case its license is lost, torn, burnt or otherwise damaged, a commercial bank, foreign bank branch or representative office shall send a written request clearly stating the reason, directly or by post to the State Bank for consideration and grant of a license copy from the original record under law.

Within two days after receiving a written request, the State Bank shall grant a license copy from the original record to the requesting commercial bank, foreign bank branch or representative office.

3. Commercial banks, foreign bank branches and representative offices shall use licenses under Article 27 of the Law on Credit Institutions.

Article 5. Licencing order and procedures

1. The order and procedures for granting an establishment and operation license for a commercial bank or an establishment license for a foreign bank branch are as follows:

a/ The preparatory committee shall make a license application dossier under Articles 13 and 14; Clauses 1, 2 and 3, Article 15; Clauses 1, 2, 3, 4, 5 and 6, Article 16; Clauses 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12, Article 17 of this Circular, and send it directly or by post to the State Bank.

Within 60 days after receiving a license application dossier, the State Bank shall send to the preparatory committee a written confirmation of receipt of the complete and valid dossier for consideration and in-principle approval. In case the license application is incomplete dossier, the State Bank shall send to the preparatory committee a written request for dossier supplementation.

b/ Within 90 days after sending a written confirmation of receipt of a complete and valid dossier, the State Bank shall give in-principle approval of the establishment of a commercial bank or foreign bank branch. In case of disapproval, the State Bank shall issue a written reply to the preparatory committee, clearly stating the reason.

c/ Within 60 days after receiving the in-principle approval of the establishment of a commercial bank or foreign bank branch, the preparatory committee shall make supplementary documents under Clause 4, Article 15, Clause 7, Article 16; and Clause 13, Article 17 of this Circular and send them directly or by post to the State Bank. Past this time limit, if the State Bank receives no or insufficient documents, its in-principle approval will be no longer valid.

Within two days after receiving sufficient supplementary documents, the State Bank shall certify in writing the receipt of sufficient documents. Within 30 days after receiving sufficient supplementary documents, the State Bank shall grant a license under regulations. In case of refusal to grant a license, the State Bank shall reply in writing clearly stating the reason to the preparatory committee.

2. The order and procedures for granting an establishment license for a representative office are as follows:

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;

Within 30 days after receiving a license application dossier, the State Bank shall send a written confirmation of receipt of a complete and valid dossier to the foreign credit institution or foreign institution engaged in banking activities. In case the license application dossier  is incomplete or invalid, the State Bank shall send a written request for dossier supplementation to the foreign credit institution or foreign institution engaged in banking activities.

b/ Within 60 days after sending the written confirmation of receipt of a complete and valid dossier, the State Bank shall grant a license under regulations. In case of refusal to grant a license, the State Bank shall reply in writing, clearly stating the reason, to the foreign credit institution or foreign institution engaged in banking activities.

Article 6. Payment of licensing fee

1. Within 15 days after their licenses are granted, commercial banks, foreign bank branches or representative offices shall pay a licensing fee to the State Bank (the Operation Center).

2. The licensing fee rates comply with the Ministry of Finance’s regulations on licensing charges and fees.

Article 7. Business registration and operation registration

After being licensed, commercial banks and foreign bank branches shall make business registration, while representative offices shall make operation registration under law.

Article 8. Commencement of operation

1. Licensed commercial banks, foreign bank branches and representative offices shall start operating after the date of operation commencement.

2. To commence operation, licensed commercial banks and foreign bank branches must fully satisfy the conditions specified in Clause 2, Article 26 of the Law on Credit Institutions.

3. To commence operation, representative offices shall disclose information under Article 25 of the Law on Credit Institutions.

4. At least 15 days before the expected date of operation commencement, licensed commercial banks and foreign bank branches shall send directly or by post a written notice of their operation commencement conditions specified in Clause 2 of this Article to the State Bank branches of provinces or cities in which they are based.

5. Commercial banks, foreign bank branches and representative offices shall commence operation within 12 months after being licensed. Past this time limit, if they fail to commence operation, their licenses shall be revoked by the State Bank.

Section 2

LICENSING CONDITIONS

Article 9. Conditions for granting an establishment and operation license for a joint-stock commercial bank

1. The conditions specified in Clause 1, Article 20 of the Law on Credit Institutions.

2. Conditions on founding shareholders:

a/ Taking full responsibility for the lawfulness of contributed capital sources;

b/ Committing to providing financial support for the joint-stock commercial bank to overcome difficulties in case the latter meets capital or liquidity difficulties;

c/ Being other than founding shareholders, owners, founding members or strategic shareholders of other credit institutions;

d/ At least two of them being institutions;

e/ Within 5 years after the license is granted, co-owning at least 50% of the charter capital upon the establishment of the joint-stock commercial bank, with institutional shareholders co-owning at least 50% of their total shares;

f/ In addition to the conditions specified at Points a, b, c and e of this Clause, an individual shareholder must satisfy the following conditions:

(i) Having Vietnamese citizenship and full civil act capacity under law;

(ii) Being other than banned persons under the Law on Enterprises;

(iii) Being financially capable to contribute capital for establishing the joint-stock commercial bank; refraining from using capital entrusted by or borrowed from other institutions or individuals for capital contribution;

(iv) Being a manager of a business making profit for at least 3 years preceding the year of submission of the license application dossier or possessing a university or postgraduate degree in economics or law;

g/ In addition to the conditions specified at Points a, b, c and e of this Clause, an institutional founding shareholder must meet the following conditions:

(i) Being established under Vietnamese law;

(ii) Being financially capable to contribute capital for establishing the joint-stock commercial bank and committing not to use capital entrusted by or mobilized or borrowed from other institutions or individuals for capital contribution;

(iii) Fulfilling all tax and social insurance obligations under regulations by the time of submission of the license application dossier;

(iv) Having an equity capital of at least VND 500 billion in 5 years preceding the year of submission of the license application dossier;

(v) Profitably operating in 5 years preceding the year of submission of the license application dossier;

(vi) Ensuring that the equity capital minus the legal capital is at least equal to the committed contributed capital according to data of the audited financial statement of the year preceding the year of submission of the license application dossier, for those engaged in business lines subject to the legal capital requirement;

(vii) Obtaining a competent authority’s written permission for contributing capital for establishing the joint-stock commercial bank under law, for state enterprises;

(viii) Complying with relevant regulations on capital contribution, for institutions licensed to be established and operate in the banking, security or insurance sector;

(ix) For commercial banks:

- Having total assets of at least VND 100 trillion, fully complying with regulations on risk management and setting up sufficient reserves under regulations at the time of submission of the license application dossier and by the time of licensing;

- Breaching no prudential ratio for banking activities under the State Bank’s regulations in the year preceding the year of submission of the license application dossier and by the time of licensing;

- Complying with the conditions on and limits of acquisition and holding of stocks of credit institutions under Clause 6, Article 103 of the Law on Credit Institutions;

- Assuring the capital adequacy ratio after contributing capital for establishing the joint-stock commercial bank.

Article 10. Conditions for granting an establishment and operation license for a joint-venture or wholly foreign-owned bank

1. The conditions specified in Clause 2, Article 20 of the Law on Credit Institutions.

2. Conditions on founding shareholders or owners being foreign credit institutions:

a/ Having not committed a serious violation of regulations on banking activities and other relevant laws of the country of origin for 5 consecutive years preceding the year of submission of the license application dossier and by the time of licensing;

b/ Having international operation experience, being rated by international credit rating agencies as stable or better and capable of fulfilling financial commitments and operating normally even in case the economic situation and conditions become unfavorable;

c/ Having made profits for 5 consecutive years preceding the year of submission of the license application dossier and by the time of licensing;

d/ Having total assets worth at least USD 10 billion at the end of the year preceding the year of submission of the license application dossier;

e/ Being evaluated by a competent authority of the country of origin as assuring the capital adequacy and other prudential ratios and having fully complied with regulations on risk management and setting up sufficient reserves under regulations of the country of origin in the year preceding the year of submission of the license application dossier and by the time of licensing;

f/ Being other than owners, founding members or strategic shareholders of other Vietnamese credit institutions.

3. Joint-venture banks’ founding members that are Vietnamese commercial banks must satisfy the conditions specified at Points a, b, c and g, Clause 2, Article 9 of this Circular.

4. Within 5 years after being licensed, founding shareholders shall co-own 100% of the charter capital of joint-venture banks or wholly foreign-owned banks.

Article 11. Conditions for granting an establishment license for a foreign bank branch

1. The conditions specified in Clause 3, Article 20 of the Law on Credit Institutions.

2. Conditions on a parent bank:

a/ Satisfying the conditions specified at Points a, b, c and e, Clause 2, Article 10 of this Circular;

b/ Having total assets worth at least USD 20 billion in the year preceding the year of submission of the license application dossier and by the time of licensing.

Article 12. Conditions for granting an establishment license for a representative office

1. The conditions specified in Clause 4, Article 20 of the Law on Credit Institutions.

2. The chief of the representative office has the full civil act capacity under Vietnamese law, is not banned by the Law on Enterprises from corporate governance and does not concurrently act as the director general (director) of a foreign bank branch in Vietnam.

Section 3

LICENSE APPLICATION DOSSIERS

Article 13. Dossier-making principles

1. Documents in a license application dossier for a commercial bank establishment and operation or a foreign bank branch establishment must be signed by the head of the preparatory committee, unless otherwise provided by this Circular. Documents signed by the head of the preparatory committee must be entitled “the preparatory committee and name of the commercial bank or foreign bank branch”.

A dossier of application for a representative office establishment license must be signed by the at-law representative of the foreign credit institution or another foreign institution engaged in banking activities, unless otherwise provided by this Circular.

2. A dossier of application for a joint-stock commercial bank establishment and operation license shall be made in one original set in Vietnamese.

3. A dossier of application for a joint-venture or wholly foreign-owned bank establishment and operation license or a foreign bank branch establishment license or a representative office establishment license shall be made in two original sets, one in Vietnamese and the other in English, of which:

a/ The dossier set in English must be consularly legalized under law, except the following documents:

(i) The document directly sent by the competent authority of the country of origin to the State Bank;

(ii) Financial statements in English.

b/ Vietnamese translations of documents in English must contain certification of the translator’s signature under Vietnamese regulations on certification;

c/ Translations of financial statements must be certified by licensed translators under law;

d/ Original documents in Vietnamese (or their copies) which are made in Vietnam are not required to be translated into English.

4. Copies of papers and diplomas must be certified by competent authorities under law.

5. Each dossier set must contain a list of documents included therein.

Article 14. Dossier of application for a commercial bank establishment and operation license

1. An application for a commercial bank establishment and operation license, made according to the form provided in Appendix 02a to this Circular and signed by founding shareholders, owner or founding members.

2. The draft charter.

3. A commercial bank establishment scheme, which contains at least the following details:

a/ Necessity to establish the commercial bank;

b/ Name of the commercial bank and name of the province or centrally run city in which the commercial bank is expected to be headquartered, operation duration, charter capital upon establishment, and operation contents;

c/ Financial capacity of initial capital-contributing shareholders or capital-contributing members;

d/ Organizational diagram and operation network of the bank projected in the first three years;

e/ A proposed personnel list, describing in detail the professional qualifications and work experience in finance, banking and risk management to meet the requirements of each position or title:

(i) Chairmen, members and independent members of the Board of Directors and the Members’ Council; heads of commissions of the Board of Directors and the Members’ Council;

(ii) Head, members and full-time members of the Control Board;

(iii) Director general (director), deputy directors general (deputy directors), chief accountant and heads of attached units in the organizational structure.

f/ Risk management policy: Identification, measurement, prevention, management and control of credit risks, operation risks, market risks, liquidity risks and other risks in the course of operation;

g/ Information technology:

(i) Projected financial investment in information technology;

(ii) The information technology system must satisfy the requirements on governance and administration and risk management of the commercial bank and the State Bank’s regulations;

(iii) Capacity of information technology application, clearly indicating the duration of investment in technology; type of technology expected to be applied; projected personnel and their information technology capacity; assurance of integration and connection of the information system with the State Bank’s management system to provide information according to the State Bank’s management requirements;

(iv) Records on information technology infrastructure to serve the commercial bank’s operation;

(v) Solutions to assuring safety and confidentiality corresponding to each type of service expected to be provided;

(vi) Identification and measurement of risks and implementation of a risk management plan for the technology expected to be applied in the field of operation of the commercial bank;

(vii) Assignment of responsibilities to report on and control the operation of the information technology system.

h/ Sustainability and development outlook of the bank in the market:

(i) Analysis and evaluation of the banking market, demonstrating the reality, challenges and prospects;

(ii) Capability of the bank to participate and compete in the market, proving its advantages when participating in the market;

(iii) Strategy for development and expansion of the operation network and operation contents of the bank, categories and number of customers, with a detailed analysis of the satisfaction of the conditions on conditional operation contents.

i/ The internal control and audit systems:

(i) Operation principles of the internal control system;

(ii) Draft basic internal regulations on organization and operation of the bank, including at least internal regulations mentioned in Clause 2, Article 93 of the Law on Credit Institutions and the following regulations:

- Regulations on organization and operation of the Board of Directors, the Members’ Council, the Control Board and executive officers;

- Regulations on organization and operation of the head office, branches and other attached units.

(iii) Operation contents and process of internal audit.

j/ A tentative business plan in the first three years, including at least the following contents: Market analysis, strategy, objectives and action plan, financial statement of each year (the accounting balance sheet, business result report, cash flow report, capital adequacy criterion and operation effectiveness criteria and explanation of the possibility to achieve financial targets in each year).

4. Documents proving the capacity of the projected governance, control and administration apparatus:

a/ Resumes, made according to the form provided in Appendix 03 to this Circular, judicial records (or equivalent documents) under law;

b/ Certified copies of diplomas proving professional qualifications;

c/ Other documents proving satisfaction of the conditions and standards prescribed by the Law on Credit Institutions and relevant laws;

d/ In case a person expected to be elected as a member of the Board of Directors, the Members’ Council or the Control Board or the director general (director) does not bear Vietnamese citizenship, in addition to the above documents, there must be a written commitment to fully satisfying the conditions for residence and working in Vietnam.

5. Minutes of the meeting of founding shareholders or founding members or the owner’s document on selection of the preparatory committee and its head, approval of the draft charter, bank establishment scheme and list of expected governance, control and administration positions.

Article 15. Dossier of application for an establishment and operation license for a joint-stock commercial bank

1. The documents specified in Article 14 of this Circular.

2. A list of founding shareholders and a tentative list of initial capital-contributing shareholders, made according to the form provided in Appendix 4 to this Circular.

3. Dossiers of initial capital-contributing shareholders:

a/ For an individual:

(i) An application for share purchase, made according to the form applicable to individuals provided in Appendix 5a to this Circular;

(ii) A list of affiliated persons, made according to the form provided in Appendix 6 to this Circular;

(iii) In addition to the above documents, a founding shareholder’s dossier must have the following documents:

- A resume, made according to the form provided in Appendix 3 to this Circular, and judicial record (or an equivalent document) as required by law;

- Financial statements of three years preceding the year of submission of the license application dossier of the enterprise managed by the founding shareholder, or a copy of the university or postgraduate degree in economics or law;

- A written commitment to providing financial support for the bank to overcome capital or liquidity difficulties;

- A list of assets worth VND 100 million or more each and debts and relevant documentary evidence of the individual, made according to the form provided in Appendix 7 to this Circular.

b/ For an institution:

(i) An application for share purchase, made according to the form provided in Appendix 5b to this Circular;

(ii) A list of affiliated persons, made according to the form provided in Appendix 6 to this Circular;

(iii) The establishment license or business registration certificate or an equivalent document;

(iv) A written proxy for its capital contribution representative at the bank as required by law;

(v) The organization and operation charter;

(vi) Identity cards or passports of its at-law representative and capital contribution representative at the bank;

(vii) A competent authority’s written permission for its capital contribution for the establishment of the bank;

(viii) The financial statement of the year preceding the year of submission of the license application dossier and the financial statement of the nearest time counted from the time of submission of the license application dossier which have been independently audited by an audit firm on the Ministry of Finance-published list of audit institutions qualified for corporate audit and have no exceptional opinions of the audit firm;

(ix) In addition to the above documents, a founding shareholder’s dossier must have the following documents:

- A resume of the capital contribution representative, made according to the form provided in Appendix 3 to this Circular, and judicial record as required by law;

- A written commitment to providing financial support for the bank to overcome capital or liquidity difficulties;

- Financial statements of the five years preceding the year of submission of the license application dossier which have been independently audited by an audit firm on the Ministry of Finance-published list of audit institutions qualified for corporate audit and have no exceptional opinions of the audit firm;

(x) A table showing the financial capability to contribute capital for the establishment of the joint-stock commercial bank, made according to the form applicable to institutions other than credit institutions provided in Appendix 8 to this Circular;

(xi) Documents of tax offices and social insurance agencies certifying the fulfillment of tax obligations and payment of social insurance premiums by the institution.

4. After receiving written in-principle approval, the preparatory committee shall additionally submit the following documents:

a/ The organization and operation charter of the joint-stock commercial bank adopted by the Shareholders’ General Meeting;

b/ The minutes of the first Shareholders’ General Meeting;

c/ The minutes of the meeting of the Board of Directors to adopt the election of the chairman of the Board of Directors; the minutes of the meeting of the Control Board on the election of the head and full-time members of the Control Board;

d/ Decisions of the Board of Directors on appointment of the director general (director), deputy directors general (deputy directors) and chief accountant;

e/ A list of initial capital-contributing shareholders, made according to the form provided in Appendix 4 to this Circular;

f/ A document of a commercial bank at which the preparatory committee opens the capital contribution account, confirming the capital contributions of initial capital-contributing shareholders;

g/ A document of title of or lawful right to use the head office of the joint-stock commercial bank;

h/ Internal regulations on organization and operation of the joint-stock commercial bank mentioned at Point i, Clause 3, Article 14 of this Circular, which have been adopted by the Shareholders’ General Meeting and the Board of Directors;

i/ Reports of founding shareholders being domestic commercial banks on satisfaction of the conditions specified at Point g, Clause 2, Article 9 of this Circular from the time of submission of the license application dossier to the time of submission of additional documents.

Article 16. Dossier of application for an establishment and operation license for a joint-venture or wholly foreign-owned bank

1. The documents specified in Article 14 of this Circular.

2. A dossier of the owner or a founding shareholder being a foreign credit institution, which comprises:

a/ Audited financial statements of the five years preceding the year of submission of the license application dossier, which have no exceptional opinions of the audit firm;

b/ A copy of the establishment and operation license or an equivalent document;

c/ A document of a competent authority of the country of origin providing the following information on the foreign credit institution:

(i) Operations permitted in the country of origin at the time of submission of the license application dossier;

(ii) Observance of the banking law and other relevant laws in the five consecutive years preceding the year of the license application dossier and by the time of submission of the license application dossier;

(iii) Capital adequacy ratio and other prudential ratios under regulations of the country of origin in the year preceding the year of submission of the license application dossier and by the time of submission of the license application dossier;

(iv) Observance of regulations on risk management and setting up of reserves in the year preceding the year of submission of the license application dossier and by the time of submission of the license application dossier.

d/ A document of an international credit rating agency on rating of the foreign credit institution within 6 months before the time of dossier submission;

e/ The organization and operation charter of the foreign credit institution;

f/ A report on the establishment, operation and development orientations of the foreign credit institution by the time of submission of the license application dossier;

g/ A decision on appointment of the capital contribution representative of the foreign credit institution at the joint-venture or wholly foreign-owned bank, enclosed with the passport of the capital contribution representative.

3. A dossier of the founding member of the joint-venture bank being a Vietnamese commercial bank, which comprises the papers and documents specified at Point b, Clause 3, Article 15 of this Circular, except the application for share purchase.

4. The joint-venture contract which has the law-prescribed principal contents; or the agreement on capital contribution between founding members, for wholly foreign-owned banks.

5. A document of a competent authority of the country of origin committing to assuring the supervision of all operations of the foreign bank (including joint-venture and wholly foreign-owned banks in Vietnam) on the basis of consolidation according to international practice.

6. Written commitments of the owner and founding members on:

a/ Providing financial, technological, governance, administration and operational assistance for the joint-venture or wholly foreign-owned bank;

b/ Assuring the maintenance of the real value of the charter capital of the joint-venture or wholly foreign-owned bank not below the legal capital and compliance with all regulations of the State Bank on operation safety.

7. After receiving written in-principle approval, the preparatory committee shall additionally submit the following documents:

a/ The organization and operation charter of the bank which has been adopted by the Members’ Council;

b/ A document of a commercial bank at which the preparatory committee opens the capital contribution account, confirming the capital contributions of founding members;

c/ A document of title of or lawful right to use the head office of the commercial bank;

d/ Internal regulations on organization and operation of the joint-venture or wholly foreign-owned bank mentioned at Point i, Clause 3, Article 14 of this Circular, which have been adopted by the Members’ Council;

e/ A report of the founding member being a domestic commercial bank on satisfaction of the conditions specified at Point g, Clause 2, Article 9 of this Circular from the time of submission of the license application dossier to the time of submission of additional documents;

f/ A document of a competent authority of the country of origin evaluating the owner or the founding member being a foreign credit institution as having satisfied the conditions specified at Points a, c and e, Clause 2, Article 10 of this Circular from the time of submission of the license application dossier to the time of submission of additional documents;

g/ In addition to documents specified at Points a, b, c, d, e and f of this Clause, the preparatory committee for establishment of the wholly foreign-owned bank in the form of single-member limited liability company shall submit the following documents:

(i) The owner’s decisions on appointment of the chairman and members of the Members’ Council, members of the Control Board, the director general (director), deputy directors general (deputy directors) and the chief accountant;

(ii) A minutes of the meeting of the Control Board on the selection of the head and full-time members of the Control Board.

h/ In addition to the documents specified at Points a, b, c, d, e and f, Clause 7 of this Article, the preparatory committee for the establishment of the joint-venture or wholly foreign-owned bank in the form of limited liability company with two or more members shall submit the following documents:

(i) The minutes of the first meeting of capital-contributing members;

(ii) The minutes of the meeting of the Members’ Council to adopt contents regarding the election of the chairman of the Members’ Council; the minutes of the meeting of the Control Board on the election of the head and full-time members of the Control Board;

(iii) Decisions of the Members’ Council on appointment of the director general (director), deputy directors general (deputy directors) and chief accountant.

Article 17. Dossier of application for an establishment license for a foreign bank branch

1. An application for a foreign bank branch establishment license, made according to the form provided in Appendix 2b to this Circular and signed by the at-law representative of the foreign bank.

2. A scheme on establishment of a foreign bank branch, which contains the following principal details:

a/ Necessity to establish the foreign bank branch;

b/ Name of the foreign bank branch, name of the province/centrally run city in which the branch office is expected to be based, operation contents and duration, and capital allocated upon the establishment;

c/ Organizational diagram and list of expected personnel of the foreign bank branch in pursuance to Article 89 of the Law on Credit Institutions; the list of expected personnel must describe in detail professional qualifications, work experience and risk management capability of each position as required;

d/ Risk management policy: Identification, measurement, prevention, management and control of credit risks, operation risks, market risks, liquidity risks and other risks in the course of operation;

e/ Information technology:

(i) Projected financial investment in information technology;

(ii) The information technology system must meet requirements of governance, administration and risk management of the foreign bank branch and regulations of the State Bank;

(iii) Capacity  of information technology application, clearly indicating: the duration of investment in technology; type of technology expected to be applied; expected personnel and their information technology capability; assurance of integration and connection of the information system with the management system of the State Bank to provide information according to the State Bank’s management requirements;

(iv) Dossier of information technology infrastructure to serve the foreign bank branch’s operation;

(v) Solutions to assuring safety and confidentiality corresponding to the type of service expected to be provided;

(vi) Identification and measurement of risks and implementation of a risk management plan for technology expected to be applied in the field of operation of the foreign bank branch;

(vii) Assignment of responsibilities to report on and control the operation of the information technology system.

f/ Sustainability and development outlook of the foreign bank branch in the market;

(i) Analysis and evaluation of the banking market, indicating reality, challenges and prospects;

(ii) Capability of the foreign bank branch to participate and compete in the market, proving its advantages when participating in the market;

(iii) Strategy for development and expansion of the operation network and banking operations, categories and number of customers, clearly analyzing the satisfaction of conditions for conditional operation contents.

g/ The internal control and audit systems:

(i) Operation principles of the internal control system;

(ii) Draft basic internal regulations on organization and operation of the foreign bank branch, including at least the internal regulations mentioned in Clause 2, Article 93 of the Law on Credit Institutions and regulations on organization and operation of the foreign bank branch;

(iii) Operation process of the internal audit.

h/ The tentative business plan in the first three years, including at least the following details: Market analyses, strategy, objectives and action plan to achieve these target, financial statement of each year (accounting balance sheet, business result report, cash flow report, capital adequacy criterion and operation effectiveness criteria and explanation of the possibility to achieve financial targets in each year).

3. The charter of the parent bank.

4. Resume of the expected director general (director) of the foreign bank branch, made according to the form provided in Appendix 3 to this Circular and certified by the parent bank, and judicial record (or an equivalent document) as required by law; diplomas and certificates proving his/her capacity and professional qualifications and documents proving his/her satisfaction of the conditions and criteria specified in the Law on Credit Institutions and relevant laws.

5. A copy of the establishment and operation license or an equivalent document granted by a competent authority of the country of origin to the parent bank.

6. A document of a competent authority of the country of origin providing the following information on the parent bank:

a/ Operations permitted in the country of origin at the time of submission of the license application dossier;

b/ Observance of the banking law and other relevant laws in the five consecutive years preceding the year of submission of the license application dossier and by the time of submission of the license application dossier;

c/ Capital adequacy ratio and other prudential ratios as prescribed by the country of origin in the year preceding the year of submission of the license application dossier and by the time of submission of the license application dossier;

d/ Observance of regulations on risk management and setting up of reserves in the year preceding the year of submission of the license application dossier and by the time of submission of the license application dossier.

7. A document of a competent authority of the country of origin committing to assuring supervision of all operations of the parent bank (including operations of the foreign bank branch in Vietnam) on the basis of consolidation according to international practice.

8. Audited financial statements of the five years preceding the year of submission of the license application dossier of the parent bank.

9. A document of an international credit rating agency rating the parent bank within six months before the time of dossier submission.

10. A document of the parent bank committing to taking full responsibility for all obligations and commitments of its branch in Vietnam, maintaining the real value of the capital allocated to the branch not below the legal capital and fully complying with the State Bank’s regulations on operation safety.

11. A report on the establishment, operation and development orientations of the parent bank up to the time of submission of the license application dossier.

12. Documents of the parent bank signed by its at-law representative on appointment of the preparatory committee and authorization of the head of the preparatory committee.

13. After receiving written in-principle approval, the preparatory committee shall additionally submit the following documents:

a/ A document on appointment of the director general (director) of the foreign bank branch, signed by the at-law representative of the parent bank;

b/ A document proving the lawful right to use the office of the foreign bank branch;

c/ Internal regulations on organization and operation of the foreign bank branch mentioned at Point g, Clause 2 of this Article, adopted by the parent bank;

d/ A document of a competent authority of the country of origin evaluating that the parent bank satisfies the conditions specified at Points a, c and e, Clause 2, Article 10, and Point b, Clause 2, Article 11 of this Circular from the time of submission of the license application dossier to the time of submission of additional documents.

Article 18. Dossier of application for a representative office establishment license

1. An application for a representative office establishment license, made according to the form provided in Appendix 2c to this Circular and signed by the at-law representative of the foreign credit institution or another foreign institution engaged in banking activities.

2. A copy of the operation license or an equivalent document granted by a competent authority of the country of origin to the foreign credit institution or another foreign institution engaged in banking activities.

3. A document of a competent authority of the country of origin providing information on observance of law by the foreign credit institution or another foreign institution engaged in banking activities.

4. A document of a competent authority of the country of origin permitting the foreign credit institution or another foreign institution engaged in banking activities to establish a representative office in Vietnam. In case regulations of the country of origin do not require a written permission, there must be a proof.

5. A report on the establishment and operation of the foreign credit institution or another foreign institution engaged in banking activities up to the time of submission of the license application dossier and the development orientations of such institution.

6. The audited financial statement of the year preceding the year of submission of the license application dossier of the foreign credit institution or another foreign institution engaged in banking activities.

7. The resume of the expected head of the representative office in Vietnam, made according to the form provided in Appendix 3 to this Circular and certified by the foreign credit institution or another foreign institution engaged in banking activities, and judicial record (or an equivalent document) as required by law; diplomas and certificates proving his/her capacity and professional qualifications.

8. A document proving the lawful right to use the office of the representative office.

Chapter III

PROVISIONS ON ORGANIZATION AND OPERATION

Section 1

GENERAL PROVISIONS

Article 19. Principle of application

Commercial banks, foreign bank branches and representative offices shall be organized and operate under the Law on Credit Institutions, this Circular and other relevant laws.

Article 20. Language of transactions

Official documents of transaction of commercial banks, foreign bank branches and representative offices must be in Vietnamese or in both Vietnamese and a commonly used foreign language.

Article 21. Operation contents

1. Commercial banks and foreign bank branches may not conduct any business activities other than banking activities and other business activities indicated in their respective licenses granted by the State Bank.

2. Banking activities and other business activities of commercial banks and foreign bank branches specified in the Law on Credit Institutions shall be conducted in compliance with the State Bank’s guidance.

3. Operation contents of wholly foreign-owned banks must be activities which their owners or foreign banks owning 50% of their charter capital are currently permitted to conduct in the countries in which these owners or foreign banks are headquartered.

4. Operation contents of foreign bank branches must be activities which their parent banks are currently permitted to conduct in the countries in which parent banks are headquartered.

5. Representative offices may conduct activities specified in Article 125 of the Law on Credit Institutions. Chiefs of representative offices may not sign business or investment contracts of their foreign credit institutions or other foreign institutions engaged in banking activities with Vietnamese individuals and institutions.

Article 23. Operation duration and change of operation duration

1. The maximum operation duration of a commercial bank or foreign bank branch indicated in its license is 99 years. The maximum operation duration of a representative office is 5 years.

2. The order, procedures and dossier of request for change of operation duration comply with the State Bank’s guidance.

Section 2

ORGANIZATIONAL STRUCTURE, GOVERNANCE AND ADMINISTRATION

Article 23. Names and head offices of commercial banks, foreign bank branches and representative offices

1. The name of a commercial bank, foreign bank branch or representative office must be:

a/ Compliant with the Law on Enterprises and other relevant laws;

b/ Given after the corresponding following model:

(i) Joint-stock commercial bank and its proper name;

(ii) Joint-venture bank and its proper name;

(iii) Single-member limited liability bank and names of foreign and Vietnamese banks;

(iv) Limited liability bank and its proper name, for wholly foreign-owned banks with two or more members;

(v) Bank and name of foreign bank - branch of province or centrally run city in which the branch is based. In case a foreign bank establishes two or more branches in a province or centrally run city, different names must be added to distinguish these branches;

(vi) Representative office and name of foreign credit institution or another foreign institution engaged in banking activities - name of province or centrally run city in which the representative office is based.

2. The head office of a commercial bank must satisfy the conditions on heads offices of enterprises specified in the Law on Enterprises and the following conditions:

a/ Being the workplace of the Board of Directors, the Members’ Council and the Executive Board and indicated in the license and business registration under law;

b/ Lying within the Vietnamese territory and at a given address with number of apartment (room) (if any), number of floor and name of building (for office buildings for lease), number of house and name of street (alley) or name of commune, ward, township, district, town, provincial city, province or centrally run city. In case a commercial bank registers to base its head office at more than one house number or building at different addresses, these house numbers or buildings must be adjacent;

c/ Assuring property safety and meeting requirements of banking activities;

d/ Having a management information system directly connecting the head office with branches and business sections of the bank, satisfying governance, administration and risk management requirements of the bank and management requirements of the State Bank.

3. The office of a foreign bank branch must satisfy the conditions on head offices of enterprises specified in the Law on Enterprises and the following conditions:

a/ Being the workplace of the director general (director) and the executive board and a place for transactions with customers as indicated in the license and business registration under law;

b/ Lying within the Vietnamese territory and at a given address with number of apartment (room) (if any), number of floor and name of building (for office buildings for lease), number of house and name of street (alley) or name of commune, ward, township, district, town, provincial city, province or centrally run city;

c/ Assuring property safety and meeting requirements of banking activities;

d/ Having a management information system directly connected with the head office of the foreign bank, satisfying governance, administration and risk management requirements of the bank and management requirements of the State Bank.

4. The office of a representative office must lie within the Vietnamese territory and at a given address with number of apartment (room) (if any), number of floor and name of building (for office buildings for lease), number of house and name of street (alley) or name of commune, ward, township, district, town, provincial city, province or centrally run city.

Article 24. Managerial organization structure of commercial banks and foreign bank branches

1. Managerial organization structure of commercial banks:

a/ A commercial bank must have an organizational structure, a governance and executive apparatus, internal audit, risk management and internal control systems suitable to its form of operation under the Law on Credit Institutions and other relevant laws;

b/ The managerial organization structure of a joint-stock commercial bank consists of the Shareholders’ General Meeting, the Board of Directors, the Control Board and director general (director);

c/ The managerial organization structure of a wholly state-owned commercial bank, joint-venture bank or wholly foreign-owned bank consists of the Members’ Council, the Control Board and director general (director),

2. Managerial organization structure of foreign bank branches:

The organizational structure and governance and executive apparatus of a foreign bank branch in Vietnam shall be decided by its parent bank in compliance with the law of the country in which the parent bank is headquartered and the provisions of the Law on Credit Institutions on organizational structure, governance and executive apparatus, internal control and audit and must be approved in writing by the State Bank.

Article 25. Organizational structure of the Risk Management Commission and Personnel Commission

1. The Board of Directors or the Members’ Council shall form the Risk Management Commission and Personnel Commission and introduce a mechanism for judging recommendations of these commissions.

2. A commission must be composed of at least three members, including its head being a member of the Board of Directors or the Members’ Council and other members appointed or dismissed under decisions of the Board of Directors or the Members’ Council according to the charter of the commercial bank. A member of the Board of Directors or the Members’ Council can act as head of one commission only. For joint-stock commercial banks, the Risk Management Commission must have at least one member being an independent member of the Board of Directors.

Article 26. Working regulations of the Risk Management Commission and Personnel Commission

1. When setting up commissions, the Board of Directors or the Members’ Council shall promulgate working regulations and define functions and tasks of these commissions. Right after promulgating working regulations, commercial banks shall report these internal regulations to the State Bank (the Banking Inspection and Supervision Agency).

2. Working regulations and functions and tasks of these commissions must contain at least the following:

a/ A working regulation:

(i) Number of members of the commission and responsibilities of each member;

(ii) Regular meetings of the commission;

(iii) Extraordinary meetings of the commission;

(iv) The making of decisions of the commission;

b/ Tasks and functions of the commissions:

(i) The Risk Management Commission:

- To advise the Board of Director or the Members’ Council on the issuance of processes and policies under its competence related to the management of risks in banking activities under law and the charter of the bank.

- To analyze and give warnings about the safety of the bank which might be affected by dangers and possible risks, and recommend preventive measures against these risks in short and long terms.

- To consider and assess the appropriateness and effectiveness of the bank’s current risk management processes and policies, thereby putting forward to the Board of Directors or the Members’ Council recommendations and proposals on changes in these processes and policies and the operation strategy.

- To advise the Board of Director or the Members’ Council on deciding to approve investments, related transactions, governance policies and risk-handling plans within the ambit of its functions and tasks assigned by the Board of Directors or the Members’ Council.

(ii) The Personnel Commission:

- To advise the Board of Director or the Members’ Council on the size and structure of the Board or the Council and executive officers suitable to the bank’s operation scale and development strategy.

- To advise the Board of Director or the Members’ Council on settling personnel-related matters arising in the course of carrying out procedures for electing, appointing, dismissing or removing from office members of the Board of Directors or the Members’ Council, Control Board and executive officers of the bank in strict compliance with law and its charter.

- To study and advise the Board of Director or the Members’ Council on the issuance, under the competence of the Board or the Council, of internal regulations on salary, remuneration and bonus regime, regulations on personnel recruitment and training and other entitlements for executive officers, officials and employees of the bank.

Article 27. Registration of charters and charter modifications or supplementations

1. A commercial bank’s charter must have the principal contents specified in Clause 1, Article 31 of the Law on Credit Institutions and must not be contrary to the Law on Credit Institutions and other relevant laws. The commercial bank shall take full responsibility before law for the contents of its charter and charter modifications or supplementations.

2. The charter or modifications or supplementations to the charter of a commercial bank shall take effect after being adopted and issued by the Shareholders’ General Meeting or the Members’ Council.

3. When granting a license, the State Bank shall certify the registration of the charter of the commercial bank. In case of charter modification or supplementation, the commercial bank shall register charter modifications or supplementations with the State Bank (the Banking Inspection and Supervision Agency) within 15 days after these modifications or supplementations are adopted.

4. A commercial bank shall send a dossier set directly or by post to the State Bank (the Banking Inspection and Supervision Agency) to request certification of the registration of charter modifications or supplementations. Such dossier comprises:

a/ A written request of the commercial bank, clearly stating the reason for and necessity of changes in the charter (enclosed with an appendix providing in detail contents of the current charter and contents requested to be modified or supplemented and legal grounds for modification or supplementation).

b/ A resolution of the Shareholders’ General Meeting or the Members’ Council to adopt the charter modification or supplementation, clearly specifying modifications or supplementations.

c/ The modified or supplemented charter of the commercial bank.

d/ Other documents at the request of the State Bank to clarify matters to be supplemented (if any).

5. The State Bank (the Banking Inspection and Supervision Agency) shall certify in writing the registration of modifications or supplementations of the charter of a commercial bank within 7 days after receiving a complete and valid dossier.

6. If detecting a content or a modified or supplemented content of the charter which is unlawful, the State Bank (the Banking Inspection and Supervision Agency) shall request in writing the commercial bank to make appropriate modifications or supplementations.

Article 28. Internal regulations

1. A commercial bank shall elaborate its internal regulations under Article 93 of the Law on Credit Institution. Internal regulations and their modifications or supplementations shall be issued by the Board of Director or the Members’ Council.

2. A foreign bank branch shall elaborate its internal regulations under Article 93 of the Law on Credit Institution or use internal regulations issued by its parent bank under the State Bank’s guidance.

3. Right after the issuance of internal regulations or the date of use of internal regulations issued by their parent banks, commercial banks or foreign bank branches shall send their internal regulations or modified or supplemented internal regulations to the State Bank (the Banking Inspection and Supervision Agency) as grounds for inspection and supervision.

Section 3

CHARTER CAPITAL, ALLOCATED CAPITAL

Article 29. Charter capital, allocated capital

1. Charter capital of commercial banks:

a/ Charter capital of a commercial bank is the capital amount actually allocated by the owner or actually contributed by shareholders or capital-contributing members and indicated in the charter of the bank.

b/ Charter capital of a bank may be increased with the following sources:

(i) Reserve fund for charter capital supplementation; equity capital increment fund; retained profits, and other funds under law;

(ii) Public offering and private placement of stocks;

(iii) Conversion of convertible bonds into common stocks;

(iv) Capital additionally allocated by the owner or additionally contributed by capital-contributing members;

(v) Other sources specified by law.

2. Allocated capital of foreign bank branches:

a/ Allocated capital of a foreign bank branch is the capital amount actually allocated by its parent bank and indicated in its license.

b/ Allocated capital of a foreign bank branch may be increased with the following sources:

(i) Retained profits;

(ii) Capital additionally allocated by the parent bank;

(iii) Other capital sources specified by law.

Article 30. Redemption of shares at request of shareholders or under decisions of joint-stock commercial banks

1. The redemption of shares of shareholders of joint-stock commercial banks must comply with law.

2. A joint-stock commercial bank may only redeem shares of its shareholders in case it can maintain prudential ratios in its banking activities and that the real value of its charter capital does not fall below the legal capital after paying for all redeemed shares. In case the redemption of shares will lead to a decrease in the charter capital of a joint-stock commercial bank, such redemption is subject to prior written approval of the State Bank.

3. The order, procedures and dossiers of request for redemption of shares which leads to a decrease in the charter capital of a joint-stock commercial bank must comply with the State Bank’s guidance.

Article 31. Transfer or redemption of capital contributions of joint-venture or wholly foreign-owned banks

1. The transfer or redemption of capital contributions must comply with the Law on Enterprises.

2. Within 5 years after a bank is granted a license, its founding members may only transfer their capital contributions among them. Within 3 years after initially contributing capital to a joint-venture or wholly foreign-owned bank, capital-contributing members may only transfer their capital contributions among them.

3. The transfer of capital contributions to institutions other than capital-contributing members of a joint-venture or wholly foreign-owned bank must assure the capital contribution percentage specified in Clause 4 or 5, Article 2 of this Circular and satisfy the following conditions:

a/ For a wholly foreign-owned bank:

(i) New partners must satisfy the conditions specified at Points b, c, d, e and f, Clause 2, Article 20 of the Law on Credit Institutions and Clause 2, Article 10 of this Circular;

(ii) In case the transfer leads to the ownership by another foreign bank of 50% of the charter capital of the wholly foreign-owned bank, such new foreign bank must satisfy all the conditions specified in Clause 3, Article 21 of this Circular.

b/ For a joint-venture bank:

(i) A new partner being a foreign bank must satisfy the conditions specified at Points b, c, d, e and f, Clause 2, Article 20 of the Law on Credit Institutions and Clause 2, Article 10 of this Circular;

(ii) A new partner being a Vietnamese commercial bank must satisfy the conditions specified at Points a, b, c and g, Clause 2, Article 9 of this Circular.

4. Conditions for redemption of capital contributions:

a/ Requests for redemption of capital contributions of capital-contributing members, conditions on payment for and handling of capital contributions comply with the provisions of the Law on Enterprises on redemption of capital contributions;

b/ After paying fully for redeemed capital contributions, the bank can still pay all debts and other property obligations, maintain prudential ratios in banking activities and assure that the real value of its charter capital does not fall below the legal capital;

c/ The bank fully complies with regulations on risk management and setting up of sufficient reserves as required at the time of requesting the State Bank to approve the redemption of capital contributions;

d/ The bank has conducted business operation profitably for 5 consecutive years preceding the year of request for redemption of capital contributions and has no accumulated loss;

e/ The bank has not been sanctioned by the State Bank for an administrative violation in the monetary field and banking activities for 5 consecutive years preceding the year of request for redemption of capital contributions and by the time of request for the State Bank’s approval of the redemption of capital contributions.

5. The transfer or redemption of capital contributions must be approved in writing by the State Bank before being conducted. The order, procedures and dossier of request for transfer or redemption of capital contributions must comply with the State Bank’s guidance.

Chapter IV

RESPONSIBILITIES OF RELATED INSTITUTIONS AND INDIVIDUALS

Article 32. Responsibilities of the preparatory committee

1. To make and submit a dossier under this Circular.

2. After obtaining written in-principle approval, the preparatory committee shall:

a/ Hold the first Shareholders’ General Meeting or the first meeting of capital-contributing members to adopt contents specified in Clauses 12 and 15, Article 2 of this Circular;

b/ Notify the capital-contributing shareholders, owner, capital-contributing members or parent bank of an account opened by the preparatory committee at a Vietnamese commercial bank for them to make their deposits into this account.

3. To guide capital-contributing shareholders in making capital contributions and examine their dossiers.

4. To take responsibility for the completeness and accuracy of the dossier submitted to the State Bank.

5. To notify the capital-contributing shareholders, founding members or parent bank of the reason for the State Bank’s refusal to grant a license for the bank.

6. To present before the examination council the satisfaction of all conditions for the grant of a license as required by the State Bank.

7. To defend contents of the scheme on establishment of the commercial bank or foreign bank branch before the examination council.

Article 33. Responsibilities of the head of the preparatory committee

1. To hold the first Shareholders’ General Meeting or the first meeting of capital-contributing members under law.

2. To sign documents under his/her competence for requesting the establishment of the bank until the State Bank grants a license.

Article 34. Responsibilities of institutions and individuals involved in the establishment, organization and operation of a commercial bank, foreign bank branch or representative office

Institutions and individuals involved in the establishment, organization and operation of a commercial bank, foreign bank branch or representative office shall adequately, accurately and promptly provide information at the request of the State Bank and the preparatory committee under this Circular and take responsibility before law for such information.

Article 35. Coordination in the grant of a license

1. The State Bank shall send a document to collect written opinions of:

a/ The People’s Committee of the province or centrally run city in which the head office of a commercial bank or the office of a foreign bank branch or representative office is to be based, on the location of such head office or office;

b/ The Ministry of Public Security (the Financial, Monetary and Investment Security Department) on the list of persons expected to be elected or appointed as members of the Board of Directors or the Members’ Council, the Control Board and director general (director) of a commercial bank, or the director general (director) of a foreign bank branch, or the head of a representative office.

2. Within 15 days after receiving the State Bank’s document, these agencies shall send their written opinions to the State Bank. Past that time limit, if the State Bank receives no written opinion of these agencies, it shall be deemed that these agencies have no objection to the grant of a license by the State Bank.

3. The State Bank shall grant a license based on opinions of these related agencies.

Article 36. Responsibilities of the State Bank

1. The council for examination of dossiers of application for commercial bank establishment and operation licenses and foreign bank branch establishment licenses (below referred to as the examination council):

a/ The examination council shall be formed under the State Bank Governor’s decision and composed of the Governor or a Deputy Governor (authorized by the Governor) as its chairman and heads of the units specified in Clauses 2, 3, 4, 5, 6, 7 and 8 of this Article as its members;

b/ The examination council is tasked to:

(i) Examine dossiers of application for commercial bank establishment and operation licenses and foreign bank branch establishment licenses.

In the course of examination, the examination council shall apply the method of direct interview to evaluate professional qualifications, rationality and feasibility of each content of the establishment scheme, banking knowledge of persons expected to be elected to managerial and executive posts of commercial banks or directors general (directors) of foreign bank branches;

(ii) Select a list of qualified dossiers based on opinions of its members, and submit it to the State Bank Governor for decision to grant licenses.

2. The Banking Inspection and Supervision Agency:

a/ To act as a focal point for receiving and examining dossiers of application for commercial bank establishment and operation licenses and foreign bank branch establishment licenses:

(i) For a dossier of application for commercial bank establishment and operation license or foreign bank branch establishment license, before giving in-principle approval, it shall:

- Examine the completeness and validity of the dossier and propose the State Bank Governor to send to the preparatory committee a written certification of complete and valid dossier or to request dossier supplementation.

- Examine the dossier and send a written request for dossier examination enclosed with the dossier to members of the examination council. Such written request for examination must clearly state results of the examination it has conducted and its proposal on the grant of a license;

- Summarize opinions of members of the examination council and propose the chairman of the examination council to convene a meeting of its members to consider the license application dossier;

- Base itself on the minutes of the meeting of the examination council to propose the State Bank Governor to send to the preparatory committee written in-principle approval or disapproval (clearly stating the reason).

The contents of written in-principle approval include: in-principle approval of the establishment and operation of the commercial bank or the establishment of the foreign bank branch; approval of the list of expected personnel of the commercial bank or foreign bank branch; approval of the organizational structure, governance and executive apparatus, internal control and internal audit systems of the foreign bank branch.

(ii) For documents additionally submitted after obtaining written in-principle approval:

- Upon the expiration of the time limit for submission of additional documents specified in this Circular, if receiving no or insufficient and invalid additional documents, the Banking Inspection and Supervision Agency shall propose the State Bank Governor to notify in writing the preparatory committee of the invalidation of the written in-principle approval.

- If receiving sufficient and valid additional documents of the dossier, the Banking Inspection and Supervision Agency shall examine them and propose the State Bank Governor to sign a decision to grant a commercial bank establishment and operation license or a foreign bank branch establishment license and a written certification of registration of the charter of the commercial bank, provided the conditions are fully satisfied and the dossier is sufficient under this Circular, or to notify in writing the refusal to grant a license (clearly stating the reason).

b/ To act as a focal point for receiving and examining dossiers of application for representative office establishment licenses, and submit these dossiers to the State Bank Governor.

c/ To be responsible for managing and archiving license application dossiers after granting licenses.

d/ To inspect and supervise the implementation by commercial banks and foreign bank branches after commencing operation under their establishment schemes.

e/ To inspect and supervise the observance of this Circular’s provisions on organization and operation of commercial banks, foreign bank branches and representative offices.

f/ To solve problems in the course of implementation of this Circular.

3. The Legal Department:

a/ Within 30 days after receiving a written request of the Banking Inspection and Supervision Agency, to examine a license application dossier and give its written opinions to the Banking Inspection and Supervision Agency;

b/ To act as a focal point for settling legal matters in the course of granting a license.

4. The Monetary Policy Department:

a/ Within 30 days after receiving a written request of the Banking Inspection and Supervision Agency, to examine a license application dossier and give its written opinions to the Banking Inspection and Supervision Agency;

b/ To assess impacts of the establishment of a new bank on monetary policies of the State Bank.

5. The International Cooperation Department:

a/ Within 30 days after receiving a written request of the Banking Inspection and Supervision Agency, to examine a license application dossier and give its written opinions to the Banking Inspection and Supervision Agency;

b/ To assess emerging issues related to Vietnam’s World Trade Organization (WTO) accession commitments and other bilateral and multilateral agreements.

6. The Information Technology Department:

a/ Within 30 days after receiving a written request of the Banking Inspection and Supervision Agency, to examine a license application dossier and give its written opinions to the Banking Inspection and Supervision Agency;

b/ To assess issues related to information technology of commercial banks and foreign bank branches.

7. The Finance and Accounting Department:

a/ Within 30 days after receiving a written request of the Banking Inspection and Supervision Agency, to examine a license application dossier and give its written opinions to the Banking Inspection and Supervision Agency;

b/ To assess issues related to financial capability of shareholders under this Circular and other current relevant regulations.

8. The State Bank branches of provinces or centrally run cities in which head offices of to-be-established banks are to be based:

a/ Within 30 days after receiving a written request of the Banking Inspection and Supervision Agency, to examine a license application dossier and give their written opinions to the Banking Inspection and Supervision Agency;

b/ To work with administrations of localities in which head offices of commercial banks and foreign bank branches are to be based on the establishment of commercial banks and foreign bank branches in these localities (when requested);

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 commencing operation;

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

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

9. The Operation Center:

a/ To guide commercial banks, foreign bank branches and representative offices in:

(i) Paying licensing fees;

(ii) Carrying out procedures for opening of accounts, transfer of capital into blocked accounts and release of capital.

b/ To send to the Banking Inspection and Supervision Agency copies of licensing fee receipts and written certifications of transfer of capital into blocked accounts and release of capital.

Chapter V

IMPLEMENTATION PROVISIONS

Article 37. Effect

1. This Circular takes effect on February 1, 2012.

2. On the effective date of this Circular, the following provisions and documents cease to be effective:

a/ Sections III, V and VI, Part I; Sections I, V and VIII, Part II; Section IV, Clause 56 and Section VI, Part III; Section I, Part IV; and Part V of the State Bank’s Circular No. 03/2007/TT-NHNN of June 5, 2007, guiding the implementation of the Government’s Decree No. 22/2006/ND-CP of February 28, 2006, on organization and operation of Vietnam-based foreign bank branches, joint-venture banks, wholly foreign-owned banks and representative offices of foreign credit institutions;

b/ Articles 4, 5, 8, 9, 10, 24, 27, 32 and 40; Clause 2, Article 38; the provisions on approval of charter modifications and supplementations in Articles 41 and 42 of the State Bank’s Circular No. 06/2010/TT-NHNN of February 26, 2010, guiding the implementation of a number of articles of the Government’s Decree No. 59/2009/ND-CP of July 16, 2009, on organization and operation of commercial banks;

c/ The State Bank’s Circular No. 09/2010/TT-NHNN of March 26, 2010, on the grant of establishment and operation licenses for joint-stock commercial banks;

d/ Article 1 and Clause 1, Article 4 of Circular No. 24/2011/TT-NHNN of August 31, 2011, on implementation of plans on simplification of administrative procedures for establishment and operation of banks under the Government’s resolutions on simplification of administrative procedures under the management of the State Bank of Vietnam.

Article 38. Organization of implementation

The director of the Office, the chief bank inspector-supervisor, the heads of the units of the State Bank of Vietnam, directors of provincial-level State Bank branches, chairpersons and members of Boards of Directors or Members’ Councils, heads and members of Control Boards, directors general (directors) of commercial banks, directors general (directors) of foreign bank branches, heads of representative offices of foreign credit institutions and other foreign institutions engaged in banking activities, and related institutions and individuals shall implement this Circular.-

For the Governor of the State Bank
Deputy Governor   
TRAN MINH TUAN