Circular 34/2024/TT-NHNN renewal of licenses, addition of operation contents to Licenses and organization, operation of commercial banks, foreign bank branches

CIRCULAR

On renewal of licenses, addition of operation contents to Licenses and organization, operation of commercial banks, foreign bank branches, Vietnam-based representative offices of foreign credit institutions and other foreign institutions engaged in banking activities

^{__________________}

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

Pursuant to the Law on Credit Institutions dated January 18, 2024;

Pursuant to the Government’s Decree No. 102/2022/ND-CP dated December 12, 2022 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

At the proposal of the Chief bank inspector-supervisor;

The Governor of the State Bank of Vietnam promulgates the Circular on renewal of licenses, addition of operation contents to Licenses and organization, operation of commercial banks, foreign bank branches, Vietnam-based representative office of foreign credit institutions and other foreign institutions engaged in banking activities.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular provides the renewal of Licenses, addition of operation contents to Licenses and organization, operation of commercial banks, foreign bank branches, Vietnam-based representative office of foreign credit institutions and other foreign institutions engaged in banking activities.

Article 2. Subjects of application

This Circular applies to:

1. Commercial banks.

2. Foreign bank branches.

3. Vietnam-based representative offices of foreign credit institutions, other foreign institutions engaged in banking activities (hereinafter referred to as representative offices).

4. Organizations and individuals involved in the renewal of Licenses, addition of operation contents to Licenses and organization, operation of commercial banks, foreign bank branches, representative office of foreign credit institutions.

Chapter II

RENEWAL OF LICENSES, ADDITION OF OPERATION CONTENTS TO LICENSES

Section 1

GENERAL PROVISIONS

Article 3. Competence to decide on the renewal of Licenses, addition of operation contents to Licenses

1. The State Bank Governor decides on the renewal of Licenses, addition of operation contents to Licenses simultaneously with the renewal of Licenses for commercial banks and foreign bank branches that are subject to micro-prudential inspection and supervision by the Banking Supervision Agency.

2. The Chief bank inspector-supervisor is competent to decide on the addition of operation contents to Licenses for commercial banks and foreign bank branches that are subject to micro-prudential inspection and supervision by the Banking Supervision Agency.

3. Directors of State Bank Branches in provinces and centrally-run cities have the competence to decide on:

a) The renewal of Licenses, addition of operation contents to Licenses simultaneously with the renewal of Licenses for foreign bank branches headquartered in provinces or cities, except for foreign bank branches specified in Clause 1 of this Article;

b) The addition of operation contents to Licenses for foreign representative offices headquartered in such provinces and cities.

Article 4. Payment of License renewal fee

1. Commercial banks or foreign bank branches having their licenses renewed must pay the license renewal fee at the State Bank (Transaction Office) or the State Bank Branches in provinces or centrally-run cities (hereinafter referred to as the State Bank Branches) where they are headquartered or make online payment on the National Public Service Portal within 15 days from the date of renewal of the Licenses.

2. The License renewal fee shall comply with the law on charges and fees.

Article 5. Notification on the renewal of Licenses, addition of operation contents to Licenses to the Business Registration Authority

1. Within 05 (five) working days from the date the State Bank Governor grants the renewal of License or addition of operation contents to Licenses simultaneously with the renewal of Licenses as prescribed in Clause 1, Article 3 of this Circular; the Chief bank inspector-supervisor grants the addition of operation contents to Licenses as prescribed in Clause 2, Article 3 of this Circular, the Banking Supervision Agency shall notify in writing enclosed with the Decision on addition of operation contents to License or renewal of License to the provincial-level business registration authority where the commercial bank or the foreign bank branch is headquartered to update on the national business registration portal.

2. Within 05 (five) working days from the date the Director of the State Bank Branch grants the renewal of License or addition of operation contents to Licenses or addition of operation contents to Licenses simultaneously with the renewal of Licenses for foreign bank branches or grant addition of operation contents to the License for foreign representative offices as prescribed in Clause 3, Article 3 of this Circular, the State Bank Branch shall notify in writing enclosed with the Decision on addition of operation contents to Licenses or renewal of License for foreign bank branch or Decision on addition of operation contents to License for foreign representative office to the provincial-level business registration authority where foreign bank branch or foreign representative office is located to update on the national business registration portal.

Section 2

RENEWAL OF LICENSES, ADDITION OF OPERATION CONTENTS TO LICENSES OF COMMERCIAL BANKS, FOREIGN BANK BRANCHES

Article 6. Principles for renewal of Licenses, addition of operation contents to Licenses

1. The State Bank of Vietnam (hereinafter referred to as the State Bank) shall not renew the operation contents that commercial banks and foreign bank branches are not permitted to engage in accordance with the law at the time of renewal.

2. The State Bank shall adjust the name of the permitted operation contents in accordance with the Law on Credit Institutions and Appendix 01, Appendix 02, Appendix 03 issued together with this Circular. Renewed Licenses replace all Licenses, written approvals (as integral parts of the License) which the State Bank has granted to such commercial banks or foreign bank branches before the time of renewal.

3. The State Bank shall consider and approve the participation of commercial banks and foreign bank branches in the international payment system according to each international payment system.

4. For foreign exchange business activities, provision of foreign exchange services; international payment services; business activities and provision of derivatives on foreign exchange, currencies and other financial assets to domestic and foreign customers; gold trading activities, addition of operation contents to the License shall comply with separate regulations of the State Bank and other relevant laws.

5. For the operation contents specified in Clause 25, Article 4 the Form of Renewal License of License for establishment and operation of commercial banking (Appendix 01) and Clause 24, Article 4 the Form of Renewal License of License to establish foreign bank branch (Appendix 02, Appendix 03), commercial banks, foreign bank branches shall be permitted to conduct after obtaining the approval of the State Bank; procedures for granting the addition of operation contents to the License shall comply with specific regulations of the State Bank and other relevant laws.

6. In case commercial banks, foreign bank branches apply for the addition of operation contents to Licenses simultaneously with the renewal of Licenses, the State Bank will consider the renewal of the Licenses, including added operation contents as applied, on the basis that commercial banks and foreign bank branches have complete dossiers as prescribed in Article 9 of this Circular.

Article 7. Order and procedures for applying for renewal of the License or addition of operation contents to License

1. Commercial banks and foreign bank branches wishing to renew the License or add the operation contents to the License or add operation contents to the License simultaneously with renew the License, shall prepare dossiers as prescribed in Article 9 of this Circular and send them by post or directly to the State Bank’s headquarter (Single-window section) (for the cases specified in Clauses 1 and 2, Article 3 of this Circular) or the State Bank Branch’s headquarter (Single-window section) (for the cases specified at Point a, Clause 3, Article 3 of this Circular).

2. Within 40 (forty) days from the date of receiving a complete and valid dossier from a commercial bank or foreign bank branch, the State Bank shall renew the License or add operation contents to the License or add operation content to the License simultaneously with the renewal of the License at the request for the commercial banks, foreign bank branches. In case of refusal, the State Bank shall reply in writing and clearly state the reason.

3. After the State Bank renews the License or adds operation contents to the License, the commercial banks or foreign bank branches must:

a) Announce the changes to the License within 07 (seven) working days from the date of renewal of the License by the State Bank, addition of operation contents to the License on 01 media of the State Bank and 01 newspaper printed in 03 consecutive issues or on 01 electronic newspaper of Vietnam;

b) The commercial banks must amend and supplement their Charters in accordance with the contents of the renewed Licenses.

Article 8. Principles of dossier preparation

1. The dossier applying for renewal of License, addition of operation contents to License (for commercial banks, foreign bank branches); the dossier applying for amendment and supplementation of the License (for foreign representative offices) shall be made in 01 set in Vietnamese.

2. The components of a foreign dossier must be consularly legalized in accordance with Vietnamese law, except for cases of exemption from consular legalization in accordance with the law on consular legalization, and must be translated into Vietnamese. Translations from foreign languages into Vietnamese must be notarized or must have their translators’ signatures authenticated in accordance with law.

In case the dossiers are copies but not certified copies, copies issued from the originals, they must be shown together with the originals for comparison, and the collators shall be responsible for the accuracy of the copies compared to the originals.

3. The dossiers of application must be signed by the legal representative or the authorized representative. In case of signing under authorization, the dossier must have a written power of attorney made in accordance with laws.

4. In each set of dossiers, there must be a list of documents.

Article 9. Dossiers of application for renewal of Licenses and addition of operation contents to the Licenses

1. In case of renewal of the License:

a) An application for renewal of the license, clearly stating the proposed operations;

b) List of operation contents enclosed with photocopies from the current license and other approvals of the State Bank (if any).

2. In case of addition of operation contents to License:

a) An application for addition of operation contents to License, clearly stating:

(i) Operation contents to be added;

(ii) Commitment to satisfy conditions for carrying out the proposed operation content and continue to maintain the satisfaction of these conditions as prescribed;

(iii) Commitment that the wholly foreign-owned bank’s owner or foreign credit institution owning 50% of the wholly foreign-owned bank’s charter capital is allowed to carry out these operations in the country where its owner or foreign credit institution is headquartered (for wholly foreign-owned banks);

(iv) Commitment that the parent bank is currently permitted to carry out these operations in the country where the parent bank is headquartered (for foreign bank branches);

(v) Report on the fact that the bank has been licensed to trade in government bonds in case of applying for addition of the operation of investment in future contracts of government bonds;

b) Resolution of the Board of Directors (Members' Council) of the commercial bank unanimously approving the application for the addition of operation contents to License; the parent bank's written agreement to apply for the addition of operation contents to License for foreign bank branches;

c) Documents proving that the expected operations in Vietnam are operations in which the owner, foreign credit institution owning 50% of the charter capital of a wholly foreign-owned bank (for a wholly foreign-owned bank), the parent bank (for a foreign bank branch) is permitted to conduct in the country where the owner, foreign credit institution or parent bank is headquartered;

d) Particularly for application for addition of the operation related to business activities, provisions of interest rate derivatives, provision of commodity derivatives or security deposit to the license, apart from the dossier referred at Points a, b and c of this Clause, commercial banks and foreign bank branches must have internal regulations, including risk management measures suitable to each operation proposed to be added to the license;

dd) In case of applying for addition of activities of participating in the international payment system  to the License, in addition to the dossier specified at Points a, b and c of this Clause, the commercial bank or foreign bank branch must additionally provide the following documents:

(i) The State Bank's written approval for commercial banks and foreign bank branches to conduct basic foreign exchange activities on the domestic and international markets;

(ii) Internal regulations on: risk management of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction to meet the requirements of the law on prevention and combat of money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction; selection criteria for connecting international payment system;

(iii) Explanation of technical solutions on information systems that meet the requirements of ensuring level-3 information system security as prescribed by law;

(iv) Documents proving that the organization operating the international payment system is legally established and operating oversea, including one of the following documents: business registration certificate or Establishment decision, tax registration certificate or other documents issued by a competent agency of the country, territories where the international payment system is established and lawfully operates;

(v) For cases that have participated in the international payment system before July 1, 2024, commercial banks and foreign bank branches shall submit the documents at Points dd(i), dd(iv) Clause 2 of this Article and the following documents: Report explaining the satisfaction of the conditions specified in Clauses 2 and 3, Article 21 of the Government’s Decree No. 52/2024/ND-CP dated May 15, 2024 on non-cash payment (including transaction data via the international payment system up to the time of submission of the dossier); contract or agreement or letter of the international payment system operator confirming that the commercial bank, foreign bank branch (or parent bank) has joined the international payment system.

3. In case of addition of operation contents to License simultaneously with the renewal of the License:

a) An application for addition of operation contents to License simultaneously with the renewal of the License, the application contains the contents specified at Point a, Clause 1 and Point a of Clause 2 of this Article;

b) The dossier specified at Point b, Clause 1 and Points b, c, d, dd Clause 2 of this Article.

Section 3

SUPPLEMENTATION AND AMENDMENT TO LICENSES FOR CHANGES OF FOREIGN REPRESENTATIVE OFFICES

Article 10. General provisions on changes of foreign representative offices

1. A foreign representative office shall compile a dossier of request for amendment or supplementation of the License and send it by post or directly to the head office of the State Bank Branch (Single-window section) in accordance with Point a, Clause 2, Article 11 of this Circular and ensure the principles of dossier preparation as prescribed in Article 8 of this Circular for the following changes:

a) Change of name;

b) Change of the location of the head office other than the province or city where the foreign representative office is located;

c) Extension of operation period.

2. The foreign representative office shall submit a written notice by post or directly to head offices of the State Bank Branches of the places where such offices are located (Single-window section) within 07 (seven) working days from the date of the following changes:

a) Change of Head of Foreign Representative Office;

b) Change of the location of the head office in the same province or city;

c) Change the head office address without changing the location of the head office.

3. After the License is amended and supplemented by the State Bank Branch with respect to the changes specified in Clause 1 of this Article, the foreign representative office shall:

a) Operate at the new location and terminate the operation at the old location within 06 (six) months from the date on which the License is amended and supplemented by the State Bank Branch, for the changes specified at Point b, Clause 1 of this Article; simultaneously, send a written notice to the State Bank Branch where the foreign representative office is located;

b) Publish the changed contents on 01 media of the State Bank and on 01 print newspaper in 03 consecutive issues or on 01 electronic newspaper of Vietnam within 07 (seven) working days from the date of amendment, supplement to the License by the State Bank Branch.

Article 11. Dossiers, order and procedures for amendment and supplementation to Licenses for changes of foreign representative offices

1. The dossier applying for amendment and supplementation of the License for the changes in Clause 1, Article 10 of this Circular comprises:

a) An application for changes, including at least the following contents:

(i) Current content;

(ii) The content expected to change. In case of name change, the name to be changed must comply with the provisions of Clause 1, Article 16 of this Circular;

(iii) Reason for change;

b) Documents proving the reason for the change in case of name change; or documents proving that the foreign representative office has the right to use or will have the legal right to use the head office in the area where the new head office is located, in case of change of the head office area other than the province or city where the foreign representative office is located;

c) The financial statement of the year preceding the year of submission of the application has been independently audited by the foreign credit institution or other foreign institution engaged in banking activities and the report on the overview of the operation of the foreign representative office in case of extension of the operation term (clearly stating the operation situation in 03 (three) consecutive years immediately before the year of submission of the application dossier and the operation plan for the following year).

2. Order and procedures for addition of operation contents to Licenses:

a) The foreign representative office shall make a dossier and send it to the State Bank Branch where the head office is located (in case of name change or extension of operation duration) or to the State Bank Branch where the head office is expected to be relocated (in case of change of the head office location). In case of extension of the operation duration, the deadline for sending dossiers is at least 60 (sixty) days before the expiration date of the License;

b) In case the dossier is incomplete and invalid, within 05 (five) working days from the date of receiving the dossier, the State Bank Branch shall request in writing the foreign representative office to supplement and complete the dossier;

c) Within 30 (thirty) days from the date of receiving a complete and valid dossier, the State Bank Branch shall issue a decision to amend and supplement the License for the changed contents of the foreign representative office. At the same time, send a written notice to the State Bank Branch where the foreign representative office is located (in case of relocating the head office to an area other than the province or city). In case of refusal, the State Bank Branch shall send a written document clearly stating the reason.

Chapter III

ORGANIZATION AND OPERATION OF COMMERCIAL BANKS, FOREIGN BANK BRANCHES, FOREIGN REPRESENTATIVE OFFICES

Section 1

GENERAL PROVISIONS

Article 12. Principles of application

Commercial banks, foreign bank branches and foreign representative offices shall organize and operate in accordance with the Law on Credit Institutions, this Circular and relevant laws.

Article 13. Operations under the law on securities

1. Commercial banks and foreign bank branches may conduct the purchase and sale of debt instruments of the Government, Government-guaranteed bonds and local government bonds on the securities market when the licenses granted by the State Bank to commercial banks and foreign bank branches having the contents of purchase,  sale of debt instruments of the Government, Government-guaranteed bonds, local government bonds or the purchase and sale of Treasury bills, negotiable instruments, Government bonds, State Bank bills and other valuable papers on the money market; buying and selling government bonds.

2. Commercial banks and foreign bank branches may provide trading clearing and payment services for securities transactions under Point a, Clause 4, Article 56 of the Law on Securities, supervisory banking activities, securities depository activities in accordance with the law on securities when the License granted by the State Bank to commercial banks foreign bank branches stating these activities and commercial banks and foreign bank branches must meet the conditions prescribed by the law on securities and securities market as follows:

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

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

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

3. Document granting addition of operation contents to the License of a commercial bank or foreign bank branch for the provision of trading clearing and payment services for securities transactions under Point a, Clause 4, Article 56 of the Law on Securities, is a written approval of the State Bank in accordance with the law on securities.

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

Article 14. Insurance agency activities

1. When the License granted by the State Bank to a commercial bank or foreign bank branch contains insurance agency activities, a commercial bank or foreign bank branch may conduct insurance agency activities for all types of insurance in accordance with the Law on Insurance Business.

2. When conducting insurance agency activities, commercial banks and foreign bank branches must comply with the law on insurance business and relevant laws.

Article 15. Notification on legal representatives and Heads of foreign representative offices

1. Within 10 (ten) days from the date of change of the legal representative, the commercial bank or foreign bank branch must notify the State Bank in writing the information of the full name; gender; title; date of birth; ethnic group; nationality; kind of identity paper; number of identity paper; date of issue; place of issue; permanent residence address; contact address of the legal representative (except for commercial banks, foreign bank branches that have notified the change of their legal representatives after having the expected list of personnel approved by the State Bank as prescribed).

2. Within 10 (ten) days from the date of change of the Head of foreign representative office, the foreign representative office must notify in writing the State Bank Branch where it is headquartered with information about full name; gender; title; date of birth; ethnic group; nationality kind of identity paper; number of identity paper; date of issue; place of issue; permanent residence address; contact address of the Head of the foreign representative office.

3. Within 05 (five) working days from the date of receivingreceiving the written notice of change of the legal representative of a commercial bank or foreign bank branch specified in Clause 1, Article 3 of this Circular, the Banking Supervision Agency shall notify in writing about the legal representative under Clause 1, Article 1 to the business registration authority of the province or centrally-run city where the commercial bank is headquartered or the foreign bank branch is located to update into the national enterprise registration portal.

4. Within 05 (five) working days from the date of receiving the written notice of change of the legal representative of the foreign bank branch headquartered in the province or city, except for the foreign bank branch specified in Clause 1, Article 3 of this Circular; the written notice of change of the Head of the foreign representative office, the Director of the State Bank Branch shall notify in writing about the legal representative specified in Clause 1 of this Article, information about the Head of the foreign representative office specified in Clause 2 of this Article to the provincial-level business registration agency where the foreign bank branch or foreign representative office is located to update to the national enterprise registration portal.

Section 2

ORGANIZATIONAL STRUCTURE AND ADMINISTRATION

Article 16. Names, head offices of commercial banks, foreign bank branches, foreign representative offices

1. The names of commercial banks, foreign bank branches and foreign representative offices must comply with the Law on Enterprises and relevant laws and be given after the corresponding legal forms and types as follows:

a) Joint Stock Commercial Bank and its proper name;

b) Joint-venture Bank and its proper name;

c) Single-member limited liability bank and name of foreign and Vietnamese credit institution;

d) Limited Liability Bank and proper name of the wholly foreign-owned bank with two or more members;

dd) 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;

e) Foreign 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 indicated in the license under law and allowed to conduct transactions with customers;

b) Lying within the Vietnamese territory and at a given address with building name (if any), number of house and name of street or name of commune, ward, township, district, town, provincial city, city of a centrally-run city, province or centrally-run city telephone number (if any), fax number (if any) and email (if any);

c) Ensuring convenient transactions with customers and complying with the State Bank's regulations on vaults;

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 commercial bank and management requirements of the State Bank.

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

a) Being the workplace of the General Director (Director), stated in the License in accordance with laws and being allowed to conduct transactions with customers;

b) Being in the territory of Vietnam, having a specific address including the name of the building (if any), house number, name of street, commune/ward/township, district/district/town/provincial city/city of a centrally-run city, province/centrally-run city; telephone number (if any), fax number (if any) and email (if any);

c) Ensuring convenient transactions with customers and complying with the State Bank's regulations on vaults;

d) Having a management information system directly connecting to the head office of a foreign credit institution, satisfying governance, administration and risk management requirements of the foreign bank and management requirements of the State Bank.

4. The head office of the foreign representative office must be located in the Vietnamese territory, in the area of operation stated in the license; telephone number (if any); fax number (if any) and email (if any).

Article 17. Organizational structure of the Risk Management Commission and the Personnel Commission

1. The Board of Directors and the Members’ Council must establish the Risk Management Commission and the Personnel Commission to assist the Board of Directors and the Members’ Council in performing their tasks and powers.

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 18. Working Regulations of the Risk Management Commission and the Personnel Commission

1. When establishing Commissions, Board of Directors and Members’ Council must promulgate working regulations and the functions and tasks of Commissions. Within 10 (ten) days from the date of promulgation, commercial banks shall send these internal regulations to the State Bank (Banking Supervision Agency) for reporting.

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

a) The working regulations of Commissions, including at least the following information: number of members of the Commission and responsibilities of each member, regular meetings of the Commission, extraordinary meetings of the Commission, form and percentage of voting on the proposals of these Commissions;

b) Functions and tasks of the Risk Management Commission include:

(i) Advising the Board of Directors and the Members’ Council in promulgating internal regulations under their jurisdiction related to risk management in banking activities in accordance with law and the bank's charter;

(ii) Analyzing and issuing warnings about the bank's safety against risks, potential risks that may affect and preventive measures against these risks in short and long terms;

(iii) Considering and evaluating the appropriateness and effectiveness of the bank's current risk management processes and policies in order to make recommendations and proposals to the Board of Directors and Members’ Council on requirements to change current processes, policies and operational strategies;

(iv) Advising the Board of Directors and Members’ Council to approve investment decisions, relevant contracts and transactions; decide on policies and policies on risk management and supervise the implementation of risk prevention measures of commercial banks within the scope of functions and tasks assigned by the Board of Directors and the Members’ Council;

c) Functions and duties of the Personnel Commission:

(i) Advising the Board of Directors and the Members’ Council on the size and structure of the Board of Directors, the Members’ Council and executives in accordance with the scale of operation and development strategy of the bank;

(ii) Advising the Board of Directors and the Members’ Council to handle personnel issues arising in the process of carrying out procedures for election, appointment, dismissal and dismissal of members of the Board of Directors, Members’ Council, members of the Supervisory Board and Executives of the bank in accordance with laws and the bank's Charter;

(iii) Studying and advising the Board of Directors and the Members’ Council in promulgating internal regulations of the bank under the competence of the Board of Directors and the Members’ Council on the regime of salary, remuneration, bonuses, regulations on personnel selection, training and other preferential policies for Executives, Officers and employees of the bank.

Section 3

CHARTER CAPITAL, ALLOCATED CAPITAL

Article 19. Charter capital, allocated capital

1. Charter capital of commercial banks:

a) Charter capital of a commercial bank is the total amount actually allocated by the owner or actually contributed by capital-contributing members of a credit institution being a limited liability company; is the total par value of shares of a credit institution being a joint-stock company sold to shareholders;

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

(i) Reserve fund for charter capital supplementation, development investment funds, equity capital increment; undistributed accumulated profits, and other funds under law;

(ii) Public offering and private placement of stocks;

(iii) Conversion from convertible bonds into ordinary shares;

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

(v) Other sources as prescribed by law.

2. Allocated capital of foreign bank branches:

a) Allocated capital of foreign bank branch is the capital actually allocated by the foreign bank to branch of foreign bank and is indicated in the License;

b) Allocated capital of foreign bank branches can be increased with the following sources:

(i) Undistributed accumulated profits;

(ii) Capital additionally allocated by the parent bank;

(iii) Other sources of capital as prescribed by law.

Article 20. Redemption of shares at the 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 the 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 bank’s legal capital after paying for all redeemed shares.

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

Article 21. Increase of capital, transfer or redemption of capital contributions of joint-venture or wholly foreign-owned banks

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

2. Within 5 (five) years after a bank is granted a license, its founding members may only transfer their capital contributions among them. Within 3 (three) 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, provided that the capital contribution percentage  complies with Clause 1, Article 77 of the Law on Credit Institutions.

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 1, Article 77 of the Law on Credit Institutions and satisfy the following conditions:

a) New partners (except for new partners of joint-venture banks that are non-bank enterprises) must meet the conditions of the founding members as prescribed in Clause 5, Article 29 of the Law on Credit Institutions and guiding documents;

b) New partners being foreign credit institutions must satisfy the conditions specified at Points b, d, dd, Clause 2, Clause 5, Article 29 of the Law on Credit Institutions and guiding documents;

c) For joint-venture banks, new partners who are non-bank enterprises must meet the following conditions:

(i) Being established under Vietnamese law or foreign law;

(ii) In case the bank is a State-owned enterprise, it must be approved in writing by a competent authority for permission to contribute capital or receive the transfer of capital contributions at a joint-venture bank in accordance with law;

(iii) In case of the enterprise is granted an establishment license and operates in the field of banking, securities and insurance, it must comply with the capital contribution and receipt of transfer of capital contributions in accordance with relevant laws;

(iv) Having an equity of at least VND 1,000 billion, total assets of at least VND 2,000 billion in 03 (three) years preceding the year of submission of a dossier of request for approval of capital increase or transfer of capital contributions for the contributed capital of from over 1% to less than 5% of the charter capital of the joint-venture bank or having an equity of at least VND 200 billion,  total assets of at least VND 400 billion in 03 (three) years preceding the year of submission of the dossier of application for approval of capital increase or transfer of capital contributions for contributed capital of 1% or less of charter capital of the joint-venture bank;

(v) For enterprises operating in business lines with legal capital requirements, the owner's capital minus the minimum legal capital must be equal to the committed contributed capital according to the data from the independently audited financial statements and without qualified opinion of the audit firm of the year preceding the year of submission of the dossier of application for approval capital increase, transfer of capital contributions;

(vi) Profitable business in 03 (three) years preceding the year of submission of the dossier of request for approval of capital increase or transfer of capital contributions;

(vii) It is not allowed to use mobilized capital or loans of other organizations and individuals to contribute capital or receive transfer of capital contributions;

(viii) Fulfilling tax and social insurance obligations as prescribed by the time of submission of dossiers of request for approval of capital increase or transfer of capital contributions;

(ix) Not being a founding shareholder, owner, founding member, strategic shareholder of another credit institution established and operating in Vietnam;

d) In case of capital increase or transfer of capital contributions leading to another foreign credit institution owning 50% of the charter capital of a wholly foreign-owned bank, the new foreign credit institution must ensure that the wholly foreign-owned bank’s operations are permitted to be conducted in the country where it is headquartered.

4. Conditions for redemption of capital contributions:

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

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) Complying fully with the provisions on risk management and provision setting aside as prescribed at the time of requesting the State Bank to approve the redemption of capital contributions;

d) Having made profits for 5 consecutive years preceding the year of requesting for redemption of capital contributions and having no accumulated loss;

dd) Not being sanctioned by the State Bank for an administrative violation in the monetary field and banking activities for 5 (five) 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 capital increase, transfer and redemption of capital contributions must be approved in writing by the State Bank before implementation. The order, procedures and dossiers of request for capital increase, transfer or redemption of capital contributions shall comply with regulations of the State Bank Governor.

Chapter IV

RESPONSIBILITIES OF RELATED INSTITUTIONS AND INDIVIDUALS

Article 22. Responsibilities of commercial banks, foreign bank branches and foreign representative offices

1. Provide adequate, accurate and timely information at the request of the State Bank as prescribed in this Circular and take full responsibility before law for the above information.

2. Satisfy conditions for implementation of the proposed activities and continue to maintain the fulfillment of these conditions as prescribed.

3. For commercial banks and foreign bank branches participating in the international payment system, the following principles must be ensured:

a) For cases where they have participated in international payment systems before the effective date of the Government's Decree 52/2024/ND-CP dated May 15, 2024 on non-cash payments, commercial banks and foreign bank branches must complete procedures for adding content of participating in international payment systems to the license in accordance with this Circular within 24 months from the effective date of the Government's Decree 52/2024/ND-CP dated May 15, 2024 on non-cash payment. Past the above-mentioned time limit, commercial banks and foreign bank branches must stop participating in international payment systems until they complete the procedures for supplementing the contents of participation in international payment systems stated in the License;

b) In the process of participating in international payment systems, commercial banks and foreign bank branches must regularly review, monitor and evaluate the participation in the international payment system, the organization and operation of the international payment system in order to make appropriate adjustments to ensure the safety of the operation of commercial banks,  foreign bank branches, fully comply with the law on prevention and combat of money laundering, terrorist financing, financing of proliferation of weapons of mass destruction and safety and confidentiality of customer information;

c) Ensuring that participation in the international payment system is in line with payment commitments in treaties to which Vietnam is a party;

d) Complying with regulations on assurance of information safety and confidentiality and information system security in banking activities according to regulations of the State Bank;

dd) Being responsible for the content and organizing the implementation of internal regulations on professional processes and risk management processes when participating in the international payment system; performing international payment system connection activities in accordance with internal regulations issued;

e) Making an annual report on transactions via the international payment system according to the form in Appendix 04 to this Circular. In case of irregularities or when necessary, commercial banks and foreign bank branches shall make reports at the request of the State Bank.

4. Pay the fee for renewal of the License as prescribed in Article 4 of this Circular.

Article 23. Responsibilities of related units

1. The Banking Supervision Agency:

a) Act as the focal point for receiving, appraising and submitting to the Governor of the State Bank dossiers of application for renewal of Licenses, addition of operation contents to Licenses of the commercial banks, foreign bank branches subject to the inspection and micro-prudential supervision of the Banking Supervision Agency under Clauses 1 and 2, Article 3 of this Circular;

b) Have documents enclosed with dossiers to collect opinions of relevant units in the State Bank on the request of granting addition of operation contents to Licenses for business activities, supply of interest-rate derivative products, supply of commodity derivatives, securities depository activities and participation in the international payment system when performing the responsibilities at Point a of this Clause;

c) Provide changed information enclosed with the Decision on addition of operation contents to Licenses or the renewed Licenses to the provincial-level Business Registration Authority where the commercial banks or  foreign bank branches are headquartered for updating in the national enterprise registration portal as prescribed in Clause 2, Article 5 of this Circular;

d) Notify the business registration authority of the change of the legal representatives of commercial banks or foreign bank branches subject to the inspection and micro-safety supervision of the Banking Supervision Agency as prescribed in Clauses 1 and 2, Article 3 of this Circular;

dd) Be responsible for managing and archiving dossiers for renewal of licenses, addition of operation contents to Licenses after the licenses have been granted;

e) Handle problems in the implementation of the Circular.

2. Transaction Offices:

a) Guide commercial banks and foreign bank branches to pay the fee for renewal of licenses;

b) Collect fees for renewal of licenses of commercial banks and foreign bank branches and remit all collected fees into the State budget according to current regulations.

3. The Payment Department:

a) Within 10 (ten) days from the date of receiving the written request from the Banking Supervision Agency or the State Bank Branch on the request for supplementation of content of participating in the international payment system to the Licenses, the Payment Department shall give specific written opinions on:

(i) The fact that the commercial banks and foreign bank branches have ensured the requirements on dossiers, for internal regulations on criteria for selecting international payment system connections;

(ii) The explanatory on the satisfaction of the conditions for internal regulations on criteria for selection of connection to international payment systems specified in Clause 3, Article 21 of the Government's Decree No. 52/2024/ND-CP dated May 15, 2024 on non-cash payments, including transaction data via the international payment system as of the time of submission of the dossier (for cases of participating in the international payment system before July 1, 2024);

b) Receive and synthesize periodic reports on transactions via international payment systems of commercial banks and foreign bank branches;

c) Handle problems during the commercial banks’ and foreign bank branches’ participation in the international payment system.

4. The Information Technology Department:

Within 10 (ten) days from the date of receiving a written request from the Banking Supervision Agency or the State Bank Branch on the addition of operation contents to Licenses for activities of participating in the international payment system, the Information Technology Department shall give specific written opinions on:

a) The fact that commercial banks and foreign bank branches have met the requirements for dossiers specified at Point dd(iii), Clause 2, Article 9 of this Circular and have internal regulations on criteria for selecting connections to international payment systems for contents related to technical conditions and ensuring safety and security when participating international payment system;

b) The explanatory on the satisfaction of the conditions for having an information system that meets the requirements of administration, safety and security as prescribed in Clause 3, Article 21 of the Government's Decree No. 52/2024/ND-CP dated May 15, 2024 on non-cash payment (for cases of participating in the international payment system before July 01, in 2024).

5. The International Cooperation Department:

Within 10 (ten) days from the date of receiving the written request of the Banking Supervision Agency or the State Bank Branch on the addition of operation contents to License for activities of participating in the international payment system, the International Cooperation Department shall review and  consider giving opinions on dossiers of commercial banks and foreign bank branches in accordance with international commitments on payment in treaties to which Vietnam is a contracting party.

6. The Monetary Policy Department:

Within 10 (ten) days from the date of receiving the written request of the Banking Supervision Agency or the State Bank Branch on the addition of operation contents to Licenses for business activities and supply of interest rate derivative products, supply of commodity derivatives, securities depository, the Monetary Policy Department must give specific opinions in writing.

7. The Exchange Management Department:

Within 10 (ten) days from the date of receiving the written request from the Banking Supervision Agency or the State Bank Branch on the supplementation of contents of participation in the international payment system to the License, the Foreign Exchange Management Department shall give specific opinions in writing on:

a) The fact that commercial banks and foreign bank branches have internal regulations on criteria for selecting connections to international payment systems for contents related to the law on foreign exchange management when participating in the international payment system (if any);

b) The explanatory on the satisfaction of the conditions for internal regulations on criteria for selection and connection of international payment systems specified in Clause 3, Article 21 of the Government's Decree No. 52/2024/ND-CP dated May 15, 2024 on non-cash payments, for contents related to the law on foreign exchange management when commercial banks, foreign bank branches participate in the international payment system (if any) (for cases of participating in the international payment system before July 1, 2024).

8. The State Bank Branches:

a) Receive and appraise dossiers of application for renewal of licenses, addition of operation contents to Licenses of foreign bank branches and dossiers of request for supplement or amendment to Licenses, for changes of foreign representative offices subject to inspection, micro-prudential supervision of the State Bank Branches as prescribed in Clause 3, Article 3 of this Circular;

b) Send a written request for opinions to the People's Committee of the province or centrally-run city where the foreign representative office is expected to be located (in case of changing the location of the head office to an area other than the province or city where the foreign representative office is located) as prescribed in Article 11 of this Circular;

c) Send the changed information enclosed with the Decision on addition of operation contents to the License or the renewed License to the provincial-level Business Registration Authority where the foreign bank branch is located for updating in the national enterprise registration portal as prescribed in Clause 3, Article 5 of this Circular;

d) Notify the business registration authority of the change of the legal representative of the foreign bank branch subject to micro-prudential inspection and supervision of the State Bank branch as prescribed in Clause 3, Article 3 of this Circular; on the change of the Head of the foreign representative office of the foreign representative office;

dd) Be responsible for managing and archiving dossiers of renewal of licenses, addition of operation contents to Licenses of foreign bank branches; supplementation or amendment of Licenses of foreign representative offices after issuing licenses;

e) Receive written notices of foreign representative offices headquartered in provinces and cities for changes specified in Clause 2, Article 10 of this Circular;

g) Notify the Ministry of Public Security (Economic Security Department) of the personnel being the Head of the foreign representative office after receiving the written notice of change from the foreign representative office;

h) Have a document enclosed with the dossier to collect opinions from relevant units of the State Bank on the request of adding operation contents to the License for the contents of business activities, supply of interest-rate derivative products, supply of commodity derivatives, securities depository activities and participation in the international payment system when performing the responsibilities specified at Point a of this Clause;

i) Guide foreign bank branches to pay the fee for renewal of licenses;

k) Collect fees for renewal of licenses of foreign bank branches, except for foreign bank branches subject to micro-prudential inspection and supervision by the Banking Supervision Agency, and remit all collected fees into the State budget according to current regulations.

Chapter V

IMPLEMENTATION PROVISIONS

Article 24. Effect

1. This Circular takes effect from July 1, 2024.

2. This Circular annuls:

a) The Governor of the State Bank of Vietnam’s Circular No. 40/2011/TT-NHNN dated December 15, 2011 providing the licensing, organization and operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions and other foreign institutions engaged in banking activities in Vietnam (Circular No. 40/2011/TT-NHNN);

b) The Governor of the State Bank of Vietnam’s Circular No. 17/2017/TT-NHNN dated November 20, 2017 amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN;

c) The Governor of the State Bank of Vietnam’s Circular No. 28/2018/TT-NHNN dated November 30, 2018 amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN;

d) The Governor of the State Bank of Vietnam’s Circular No. 25/2019/TT-NHNN dated December 02, 2019 amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN;

dd) The Governor of the State Bank of Vietnam’s Circular No. 37/2019/TT-NHNN dated December 31, 2019, guiding insurance agency activities of credit institutions and foreign bank branches for insurance enterprises;

e) The Governor of the State Bank of Vietnam Governor’s Circular No. 28/2021/TT-NHNN dated December 31, 2021 amending and supplementing a number of articles of Circular No. 40/2011/TT-NHNN;

g) The Governor of the State Bank of Vietnam’s Circular No. 13/2023/TT-NHNN dated 31 October 2023 amending and supplementing a number of articles of the Circulars providing for the grant of licenses for, organization and operation of, and dossiers, order and procedures for approval of changes for, commercial banks and foreign bank branches.

3. To annul Article 1 of the Governor of the State Bank of Vietnam’s Circular No. 17/2018/TT-NHNN dated August 14, 2018 amending and supplementing a number of articles of the Circulars prescribing the licensing, operation network and foreign exchange operation of credit institutions and foreign bank branches.

Article 25. Transitional provisions

1. Written requests for addition of operation contents to Licenses for changes of foreign representative offices submitted before the effective date of this Circular shall continue to be considered and handled in accordance with law at the time of submission of dossiers.

2. The written request for renewal of the License, addition of operation contents to License, addition of operation contents to License simultaneously with renewal of the License of a commercial bank or foreign bank branch that has been submitted before the effective date of this Circular shall continue to be considered and handled in accordance with laws at the time of submission of the dossier.

3. Commercial banks and foreign bank branches may continue to collect insurance premiums and collect dossiers to serve the settlement of indemnities and insurance payments according to agreements signed before July 1, 2024 for insurance contracts and agreements that commercial banks, foreign bank branches act as insurance agents. The amendment, supplementation and extension of insurance contracts and agreements for which a commercial bank or foreign bank branch acts as an insurance agent may only be carried out if the amendments, supplements and extensions are in accordance with the Law on Credit Institutions and this Circular.

Article 17. Organization of implementation

Chief Office, Chief bank inspector-supervisor, heads of units under the State Bank of Vietnam, commercial banks, foreign bank branches, Vietnam-based representative offices of foreign credit institutions and other foreign organizations engaged in banking activities shall be responsible for the implementation of this Circular./.