Decision No. 1090/2003/QD-NHNN dated September 17, 2003 of the State Bank of Vietnam promulgating the Regulation on opening and terminating the operation of, transaction offices, branches, transaction bureaus of joint-venture banks in Vietnam

DECISION

PROMULGATING THE REGULATION ON OPENING AND TERMINATING THE OPERATION OF TRANSACTION OFFICES, BRANCHES, TRANSACTION BUREAUS OF JOINT-VENTURE BANKS IN VIETNAM

THE STATE BANK GOVERNOR

Pursuant to December 12, 1997 State Bank Law No. 01/1997/QH10 and June 17, 2003 Law No. 10/2003/QH11 Amending and Supplementing a Number of Articles of the Vietnam State Bank Law;

Pursuant to Credit Institution Law No. 02/1997/QH10 dated December 12, 1997;

Pursuant to the Government's Decree No. 86/2002/ND-CP dated November 5, 2002 defining the functions, tasks, powers and organizational structures of the ministries and ministerial-level agencies;

Pursuant to the Government's Decree No. 13/1999/ND-CP dated March 17, 1999 on organization and operation of foreign credit institutions and/or representative offices of foreign credit institutions in Vietnam;

At the proposal of the director of the Department on Banks and Non-Bank Credit Institutions,

DECIDES:

Article 1. To promulgate together with this Decision the Regulation on opening and terminating the operation of transaction offices, branches and/or transaction bureaus of joint-venture banks in Vietnam.

Article 2. This Decision takes effect 15 days after its publication in the Official Gazette.

Article 3. The director of the Office, the director of the Department on Banks and Non-Bank Credit Institutions, the heads of the units under the State Bank, the directors of the State Bank's branches in the provinces and centrally-run cities, the chairmen of the Managing Boards and the general directors (or directors) of the joint-venture banks in Vietnam shall have to implement this Decision.

REGULATION

ON OPENING AND TERMINATING THE OPERATION OF TRANSACTION OFFICES, BRANCHES AND/OR TRANSACTION BUREAUS OF JOINT-VENTURE BANKS IN VIETNAM
(Promulgated together with the State Bank Governor's Decision No. 1090/2003/QD-NHNN dated September 17, 2003)

Chapter I

GENERAL PROVISIONS

Article 1. The joint-venture banks shall open and terminate the operation of their transaction offices, branches and/or transaction bureaus according to this Regulation.

Article 2. In this Regulation, the terms and phrases below shall be construed as follows:

1. A joint-venture bank is a bank set up with capital contributed by the Vietnamese party (comprising one or many Vietnamese banks) and the foreign party (comprising one or many foreign banks) on the basis of a joint-venture contract. Joint-venture banks are the Vietnamese legal persons, which are headquartered in Vietnam, operate according to their establishment and operation licenses and the relevant law provisions of Vietnam.

2. Transaction offices of joint-venture banks are dependent units, having their seals, having tasks to partly carry out activities of the joint-venture banks and a number of functions relating to branches under the joint-venture banks' authorization.

3. Branches of joint-venture banks are independent units, having their seals and having tasks to partly carry out activities of the joint-venture banks under the joint-venture banks' authorization.

4. Transaction bureaus constitute parts of the organizational structure of the transaction offices, branches of joint-venture banks, having their own seals, operating mainly to mobilize capital and provide loans in the geographical areas and perform a number of other banking operations under the authorization of transaction offices, branches.

Article 3. The joint-venture banks may open, and terminate the operation of transaction offices and/or branches after getting the written approvals of the State Bank.

Chapter II

OPENING TRANSACTION OFFICES, BRANCHES

Article 4. The joint-venture banks are entitled:

a) To open transaction offices in provinces or cities where they are headquartered;

b) To open branches in provinces and centrally-run cities, including where they are headquartered.

Article 5. The joint-venture banks shall be considered and permitted by the State Bank to open transaction offices and/or branches when they fully meet the following conditions:

1. Having the minimum operation duration of 3 years as from the date of commencing their operation.

2. Having the minimum charter capital being equal to the legal capital as provided for by the Government.

3. Having conducted business operations with profits in the latest two years. The rate of outstanding debts at the end of the preceding quarter is below 5%.

4. The administrative and executive apparatus and the internal inspection system operate with efficiency.

5. The information system satisfies the managerial requirements.

6. Not violating regulations on ensuring safety in banking operations:

a) Cases where loans must not be provided;

b) Credit restriction;

c) Lending, guarantee limits;

d) Capital contribution, share purchase limits;

e) Safety rate;

f) Risk reserve.

7. Not violating other provisions of law.

Article 6. A dossier proposing the State Bank to approve the opening of transaction office or branch of a joint-venture shall include:

1. The document of the Managing Board chairman or the authorized person addressed to the State Bank Governor, requesting the approval of the opening of the transaction office or branch of the joint-venture bank (in case of authorization, there must be the written authorization of the Managing Board chairman), which states briefly: the necessity to have banking operations in the locality; the appellation; the locality where the transaction office or branch is expected to be opened; the operation contents and scope; and at the same time committing to satisfy all the prescribed conditions to open the transaction office or branch.

2. The resolution of the Managing Board on the opening of transaction office, branch.

3. The scheme on opening the transaction office, branch, which should contain the following contents: the necessity to have banking operations in the locality; study of the local market; the projected organizational apparatus; the operation contents and scope; the plan on operation in the first three years.

4. The originals (or notarized copies) of the financial statement of the joint-venture bank, the auditing report of the independent auditing organization in the latest two years, the report on achieving the safety rates of the joint-venture bank at the end of the latest quarter.

5. The written document of the provincial/municipal People's Committee of the locality where the joint-venture bank plans to open its transaction office or branch, permitting the joint-venture bank to locate its headquarter.

Article 7. The order and procedure of requesting the State Bank to approve the opening of transaction offices, branches of joint-venture banks:

1. The joint-venture banks shall send documents of the chairmen of the Managing Boards, schemes on opening transaction offices or branches, and the reports mentioned at Points 1, 3 and 4 of Article 6 of this Regulation to the State Bank branches in the provinces or centrally-run cities where they plan to open their transaction offices and/or branches.

2. Within 7 working days after fully receiving the documents mentioned in Clause 1 of this Article, the State Bank's provincial/municipal branches shall give their opinions in writing on the necessity of banking operations in the localities and send one copy to the joint-venture banks and one copy to the State Bank (the Department on Banks and Non-Bank Credit Institutions).

3. After receiving the documents of the State Bank's provincial/municipal branches, the joint-venture banks shall send dossiers of application for opening transaction offices and/or branches, as defined in Article 6 of this Regulation, to the State Bank (the Department on Banks and Non-Bank Credit Institutions).

4. Within 15 working days as from the date of receiving the complete and valid dossiers of the joint-venture banks, the State Bank shall consider and give its written approval or disapproval of the opening of transaction offices and/or branches of the joint-venture banks; in case of disapproval, the reasons therefore must be clearly stated.

Article 8.

1. Within 6 months after the State Bank approves the opening of transaction offices and/or branches, the joint-venture banks must complete all necessary law-prescribed procedures in order to put their transaction offices and/or branches into operation. In case of failure to commence the operation thereof within the above-mentioned time limit, the joint-venture banks must send their written explanations to the State Bank and apply for the extension of the operation-commencing time limit. The State Bank may consider and permit the extension of operation-commencing time limit for 6 months at most.

2. Before their transaction offices or branches start operation, the joint-venture banks must make business registration and publish such on central and local newspapers as provided for by law; notify the State Bank's provincial/municipal branches of the offices and time to commence the operation of transaction offices, branches; send to the State Bank (the Department on Banks and Non-Bank Credit Institution) documents certifying the lawful use of the offices of the transaction offices or branches, the (notarized) copies of the business registration papers, the issues of newspapers which carry the announcement on opening of transaction offices, branches.

3. Upon the expiry of the inaugural time limit (including the extended duration), if the transaction offices and/or branches of the joint-venture banks still fail to commence their operation, the written approval of the opening of the transaction offices or branches shall be invalid.

4. The operation duration of transaction offices, branches shall be equal to the remaining operation duration of the joint-venture banks.

Article 9.

1. The transaction offices and branches of joint-venture banks shall have to submit periodical reports to the State Bank branches in the provinces or cities where they are based according to the State Bank's regulations on the information and reporting regime.

2. The State Bank Inspectorate shall coordinate with the inspectorates of the State Bank's provincial/municipal branches in conducting regular and irregular inspection and examination of the organization and operation of transaction offices and branches of the joint-venture banks, handle violations of banking operation under the provisions of law.

Chapter III

TERMINATION OF OPERATION OF TRANSACTION OFFICES, BRANCHES

Article 10. Transaction offices and branches of joint-venture banks shall terminate their operation in the following cases:

1. Automatic termination of operation.

The transaction offices and branches of joint-venture banks shall automatically terminate their operations when the joint-venture banks terminate their operation.

2. The voluntary termination of operation.

3. The compulsory termination of operation.

Section I. VOLUNTARY TERMINATION OF OPERATION

Article 11.

1. Within 30 days before the planned date for termination of operation of transaction offices, branches, the joint-venture banks shall send the State Bank the dossiers of application for termination of operation of transaction offices, branches.

2. A dossier of requesting the State Bank to approve the termination of operation of a transaction office or branch shall include:

a) The document of the Managing Board chairman or the authorized person on the termination of operation of the transaction office or branch (in case of authorization, there must be the written authorization of the Managing Board chairman) clearly stating the reasons for termination, the name and address of the transaction office or branch which shall terminate their operation, the estimated time of operation termination.

b) The Managing Board's resolution on termination of operation of the transaction office or branch.

c) The handling plan upon the termination of operation of the transaction office or branch, clearly stating the real situation of organization and operation of the transaction office or branch; the order and procedures for properly liquidation, the plan on recovery of assets and payment of debts; the plan on settlement of the laborers' interests and other matters related to the responsibilities of the transaction office or branch upon the termination of its operation.

Article 12. The order and procedures for requesting the State Bank to approve the termination of operation of transaction offices, branches of joint-venture banks:

1. The joint-venture banks shall send documents of the Managing Board chairman and handling plans upon the termination of operation of their transaction offices or branches as mentioned at Items a, c, Clause 2, Article 11 of this Regulation to the State Bank branches in the provinces or cities where the transaction offices or branches which are to terminate their operation are based.

2. Within 7 working days after fully receiving the documents mentioned in Clause 1 of this Article, the State Bank's provincial/municipal branches shall give their written opinions on the situation of operation of the transaction offices or branches in the localities, sending one copy to the joint-venture banks and one copy to the State Bank (the Department on Banks and Non-Bank Credit Institutions).

3. After receiving the documents of the State Bank's provincial/municipal branches, the joint-venture banks shall send the dossiers of application for termination of operation of transaction offices or branches as provided for in Clause 2, Article 11 of this Regulation to the State Bank (the Department on Banks and Non-Bank Credit Institutions).

4. Within 15 working days at most after fully receiving the dossiers of the joint-venture banks, the State Bank shall consider and give its written approval or disapproval of the termination of operation of transaction offices or branches of the joint-venture banks. In case of disapproval, the State Bank shall explain the reasons therefor in writing.

5. The written approval of termination of operation of transaction offices or branches of joint-venture banks shall be addressed to the State Bank branches and People's Committees of the provinces or cities where the transaction offices or branches which are to terminate their operation are based; the business registration offices, be publicly posted up at the head-offices of the joint-venture banks and offices of the transaction offices or branches which are going to terminate their operation; be published on central and local newspapers according to law provisions.

Article 13. Within 30 working days after receiving the written approval of the State Bank, the joint-venture banks must terminate all operations of their transaction offices or branches; return the business registration papers to the business registration offices as prescribed; re-submit the seals to the police offices which granted the certificates of seal specimen registration.

Article 14. The joint-venture banks with transaction offices and/or branches terminating their operation shall bear full responsibility for the continued payment of all payable amounts to creditors (if any), liquidate assets, settle interests for laborers and fulfill other obligations according to law provisions.

Section II. COMPULSORY TERMINATION OF OPERATION

Article 15. The joint-ventures which are compelled to terminate the operation of their transaction offices and/or branches when such operation violates law provisions.

Article 16.

1. Basing him/herself on the results of inspection mentioned in Clause 2, Article 9 of this Regulation and the proposal of the inspectors, the State Bank Governor shall issue documents requesting the joint-venture banks to terminate the operation of their transaction offices and/or branches.

2. The written request for termination of operation of transaction offices and/or branches of joint-venture banks shall be sent to the State Bank branches and the People's Committees of the provinces or cities where the transaction offices or branches which are to terminate their operation are based; the business registration offices, be publicly posted up at the head-offices of the joint-venture banks and the offices of the transaction offices or branches which are to terminate their operation; published on central and local papers under the provisions of law.

3. Within 30 working days after receiving the written requests for termination of operation, the joint-venture banks must immediately stop all operations of the transaction offices and/or branches; return business registration papers to the business registration offices as prescribed; hand over the seals to the police offices which have granted the certificates of seal specimen registration.

Article 17. The joint-venture banks whose transaction offices and/or branches are forced to terminate their operation shall have to bear full responsibility for the continued payment of all payable amounts to creditors (if any), liquidate assets, settle interests for laborers and fulfill other obligations as provided for by law.

Chapter IV

OPENING AND TERMINATING THE OPERATION OF, TRANSACTION BUREAUS OF TRANSACTION OFFICES, BRANCHES

Article 18.

1. The Managing Boards of the joint-venture banks shall themselves prescribe the conditions and procedures for opening transaction bureaus according to law provisions after obtaining the written consents of the People's Committees of urban districts (rural districts, provincial towns) and the State Bank branches in provinces or cities where the joint-venture banks plan to open the transaction bureaus.

2. Before the transaction bureaus commence their operation, the joint-venture banks must notify the time of operation commencement to the State Bank branches in the provinces or cities where the transaction bureaus shall be opened.

3. Quarterly, the joint-venture banks shall report to the State Bank branches in the provinces or cities where the transaction bureaus are opened on the number of transaction bureaus in the localities.

Article 19. The Managing Boards of the joint-venture banks shall themselves prescribe the conditions, order, handling plans upon the termination of operation of transaction bureaus according to law provisions after obtaining the written consents of the State Bank branches in the provinces or cities where exist the transaction bureaus which shall terminate their operation.

Chapter V

IMPLEMENTATION PROVISION

Article 20. The amendment and supplementation of articles of this Regulation shall be decided by the State Bank Governor.