STATE BANK OF VIETNAM
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No. 03/2007/TT-NHNN
SOCIALIST REPUBLIC OF VIETNAM
Independent – Freedom – Happiness
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Hanoi, 05 June 2007
CIRCULAR
GUIDING THE IMPLEMENTATION OF SEVERAL ARTICLES OF THE DECREE NO. 22/2006/ND-CP DATED 28 FEBRUARY 2006 OF THE GOVERNMENT ON THE ORGANIZATION AND OPERATION OF FOREIGN BANK BRANCHES, JOINT VENTURE BANKS, 100% FOREIGN OWNED BANKS, REPRESENTATIVE OFFICE OF FOREIGN CREDIT INSTITUTIONS IN VIETNAM
Pursuant to Article 67 of the Decree No.22/2006/ND-CP dated 28 February 2006 of the Government on the organization and operation of foreign bank branches, joint venture banks, 100% foreign owned banks, representative office of foreign credit institutions in Vietnam (hereinafter referred to as the Decree), the State Bank of Vietnam (hereinafter referred to as the State Bank) hereby provides guidance on the implementation of the Decree as follows:
Part I
GENERAL PROVISIONS
I. GOVERNED SCOPE AND SUBJECTS OF APPLICATION
1. This Circular provides guidance on the implementation of several Articles of the Decree which are applicable to foreign bank branches, joint venture banks, 100% foreign owned banks, representative office of foreign credit institutions in Vietnam
II. INTERPRETATION
In this Circular, following terms shall be construed as follows:
2. “Competent representative” means the Chairperson of the Board of Directors, General Manager (Manager) of a foreign bank, foreign credit institution, Vietnamese bank participating in a joint venture, organization which is the party making capital contribution to a 100% foreign owned bank; persons authorized in writing by them; persons who have full competence, according to the Charter or internal regulations of this organization, to sign documents stipulated in this Circular and perform related works within the scope of assigned competence.
3. “Executive officers” include General Manager (Manager), Deputy General Manager (Deputy Manager), Chief Accountant; chief, deputy chief of units, departments of management, operation.
4. “Opening of operation” means the commencement of banking activities; “date of operation opening” means the date of commencing the operation.
III. CONDITIONS, FILE, PROCEDURES OF ISSUANCE OF THE LICENSE FOR OPENING A FOREIGN BANK BRANCH; ESTABLISHMENT AND OPERATION LICENSE OF A JOINT VENTURE BANK, A 100% FOREIGN OWNED BANK; LICENSE FOR OPENING REPRESENTATIVE OFFICE OF FOREIGN CREDIT INSTITUTION (HEREINAFTER REFERRED TO AS LICENSE)
5. Conditions for the issuance of license
5.1 Conditions generally applicable to foreign bank branches, joint venture banks, 100% foreign owned banks
a. Foreign bank must not seriously violate provisions on banking activity and other provisions of applicable laws of its home country within the latest 3 consecutive years prior to the year applying for the license till the time when the State Bank handles, considers application file for the issuance of the license;
b. Foreign bank must have experience in international operation, is ranked from average and stable upwards by international credit rating organizations, can prove its ability to perform financial commitments and operate normally even when economic situation, condition changes in an inconvenient tendency;
c. Foreign bank must have a healthy financial situation, satisfying following minimum criteria:
- To achieve the minimum adequacy capital ratio of 8% upwards and prudential ratios in accordance with international rules, have bad debt ratio (NPL) of less than 3% from the year prior to the year applying for the license till the time where the State Bank considers the application file for the issuance of the license;
- To make profit from operation within the latest 3 consecutive years at the minimum prior to the year applying for the license;
d. Competent supervision, inspection agency of the home country is capable of supervising entire activities of the foreign bank on synthetic basis under international rules; has entered into commitments (memorandum of understanding, agreement, exchange letter and other documents of the equivalent value) with the State Bank of the cooperation in the management, supervision to activities and information exchange.
5.2. Conditions for opening a foreign bank branch
Besides general conditions stipulated in point 5.1 hereinabove, a foreign bank (parent bank) must satisfy following conditions to be granted the License for the opening of a branch:
a. Conditions provided for in paragraph 2, Article 106 of the Law on credit institutions, including:
- Appropriated capital of the foreign bank branch is at least equal to the legal capital in accordance with applicable provisions of the Government;
- Executive officers possess full civil act capacity and professional qualifications correspondent to banking activity; General Manager (Manager) of the foreign bank branch must at least satisfy following required conditions:
+ Being in good health, having professional morality, being honest, incorruptible, knowledgeable about laws and conscious of compliance with the laws;
+ Graduating at least from university, major in economics, banking, finance, law, business administration;
+ Having at least 3 years of experience in finance, banking area;
- Availability of a feasible business plan, in which there must be at least a business, operation plan for the first three (03) years in accordance with the guidance of files in point 6.1.b of this Circular;
- Being permitted to open a bank branch in Vietnam by the competent agency of its home country;
- Availability of a written document issued by the competent agency of its home country ensuring the ability of supervision over the entire activities of the branch in Vietnam;
- Availability of a written document issued by the foreign bank ensuring the responsibility taking for all obligations and commitments of its branch in Vietnam; ensuring the maintenance of actual value of appropriated capital of the branch not to be lower than the legal capital and fully satisfying provisions on operational prudence in accordance with applicable provisions of the State Bank.
b. Total assets of the foreign bank as of the year prior to the year applying for the license are at least equal to USD 20 billion.
5.3. Conditions for establishment and operation of a joint venture bank, 100% foreign owned bank
Besides general conditions stipulated in point 5.1 hereinabove, the foreign bank must satisfy following conditions to be granted the establishment and operation License of joint venture bank, the establishment and operation license of 100% foreign owned bank:
a. Conditions provided for in paragraph 1, Article 22 of the Law on credit institutions, including:
- Minimum charter capital of the joint venture bank, 100% foreign owned bank is equal to the legal capital in accordance with applicable provisions of the Government;
- Managerial, executive officers of joint venture bank, 100% foreign owned bank must possess full civil act capacity and professional qualifications correspondent to the bank activity; members of the Board of Directors, Board of Supervision, executive officers must fully satisfy conditions, standards in accordance with provisions of the Law on credit institutions and guidance of the State Bank on the conditions, standards for members of the Board of Directors, Controllers Committee, executive officers of credit institution:
- Availability of a feasible business plan, in which there must be at least business, operation plan for the first three (03) years in accordance with the guidance on file at point 6.2.b of this Circular;
- Charter on the organization and operation of the joint venture bank, 100% foreign owned bank must be in accordance with provisions of applicable laws of Vietnam;
b. Foreign banks and capital contributors being foreign organizations must be permitted to participate in the establishment of the joint venture bank, 100% foreign owned bank in Vietnam by the competent agency of their home country;
c. Total assets of the foreign bank by the end of the year prior to the year applying for the license shall be at least equivalent to USD 10 billion;
d. The foreign bank and capital contributors must make a written commitment with the State Bank on:
- Being ready to give support to the 100% foreign owned bank, joint venture bank in Vietnam in terms of finance, technology, management, execution and operation
- Ensuring to maintain the actual value of the charter capital of 100% foreign owned bank, joint venture bank not to be lower than the legal capital and fully satisfy provisions on operational prudence in accordance with applicable provisions of the State Bank.
e. Vietnamese banks making capital contribution to the establishment of a joint venture bank or foreign organizations which are not foreign banks making contribution capital to the establishment of the 100% foreign owned bank must be either foreign banks or prestigious organizations which have financial capacity; operate healthily, perform efficient, profitable business activity under above mentioned principles of this Circular. Specifically, Vietnamese banks must satisfy following conditions:
- The operation time is at least 5 years;
- Total assets is at least VND 10,000 billion, rate of bad debt is less than 2% of the total outstanding debt, not committing any violation to provisions on prudence in banking activity as stipulated by the State Bank of Vietnam by the year prior to the year applying for the license till the time where the State Bank considers the application for license;
- Performing profitable business in three (03) consecutive years prior to the year applying for license.
5.4. Conditions for opening a representative office of foreign credit institution
a. Foreign credit institution must be a legal entity authorized to engage in banking activity in its home country;
b. Foreign credit institution must be authorized by the competent agency of its home country to open a representative office in Vietnam
c. Foreign credit institution has set up a cooperative relationship with Vietnam economic organizations or has a demand for looking for, promoting, developing the cooperative relationship with Vietnam economic organizations;
d. Foreign credit institution must not seriously violate provisions on banking activity and other provisions of the laws of its home country within the latest 3 consecutive years prior to the year applying for the license till the time when the State Bank handles, considers application file for the issuance of the license;
6. Application file for a license
6.1. Application file for the license of opening a foreign bank branch
a. Application file for the license of opening the foreign bank branch shall be signed by a competent representative of the foreign bank (Appendix 1a attached);
b. A business plan which can prove the feasibility; including following main and required contents:
- Necessity to establish the branch, customers’ demand, ability to satisfy the demand for banking service, ability to manage risk types, ability to apply modern technology in the management of banking activity and risks;
- Expected operation location and human resource;
- Organization structure, managerial, executive, internal audit apparatus; system of internal inspection, control, regime on prevention from and combating against money laundering is organized sensibly in line with provisions of Vietnamese laws and international rules;
- Operational content, method of business operation;
- General report of assets; income and expense statement, cash flow statement, major financial indexes, expected prudential ratios and related notes demonstrating the economic interest and calculation of economic efficiency in the first 3 years of operation of the foreign bank branch in Vietnam;
c. Charter of the foreign bank;
d. The curriculum vitae (which is certified by the foreign bank) and diplomas, certificates evidencing the capability and professional qualification of General Manager (Manager) of the foreign bank branch;
e. A copy of the establishment and operation License of the foreign bank issued by the competent agency of its home country;
g. Written document issued by the competent agency of its home country permitting such foreign bank to open a foreign bank branch in Vietnam; Where a written acceptance is not required in accordance with provisions of the home country, an evidence thereof shall be needed;
h. Written document issued by the competent agency of its home country confirming the compliance with the laws and financial status of the foreign bank within the latest 3 consecutive years prior to the application for the license which evidences its ability to satisfy the conditions provided for in item a, c, point 5.1 mentioned above;
i. Written document issued by competent inspection, supervision agency of its home country committing to ensure the ability to supervise the entire activities of the foreign bank (including activity of the foreign bank branch in Vietnam) on the synthetic basis in accordance with international rules;
k. Audited annual financial statements in the latest 3 years of the foreign bank;
l. Written document or materials of international credit rating organizations (Moody’s, Standard & Poor, Fitch...) on credit rating for the foreign bank;
m. Written document of the foreign bank ensuring to take full responsibility for all obligations and commitments of its branch in Vietnam; ensuring to maintain the actual value of appropriated capital of the branch not lower than the legal capital and fully satisfy provisions on operational prudence in accordance with provisions of the State Bank.
n. General overview on the establishment history, development and operation process of the foreign bank till the reporting time, and development orientation in the future.
6.2. Application file for the issuance of an establishment and operation license of a joint venture, 100% foreign owned bank:
a. Application file for the issuance of the establishment and operation license of the joint venture bank in Vietnam shall be signed by the competent representative of parties to the joint venture (Appendix 1b attached); Application file for the issuance of the establishment and operation license of the 100% foreign owned bank shall be signed by the competent representative of the parent bank (Appendix 1c attached)
b. An business plan (which has been approved by the joint venture parties, parent bank, capital contributors) which can prove the feasibility; including following main and required contents:
- Necessity to establish the bank, customers’ demand, ability to satisfy the demand for banking service, ability to manage risk types, ability to apply modern technology in the management of banking activity and risks;
- Expected operation location and human resource;
- Organization structure, managerial, executive, internal audit apparatus; system of internal inspection, control, regime on prevention from and combating against money laundering is organized sensibly in line with provisions of Vietnamese laws and international rules;
- Operational content, method of business operation;
- General report of assets; income and expense statement, cash flow statement, major financial indexes, expected prudential ratios and related notes demonstrating the economic interest and calculation of economic efficiency in the first 3 years of operation of the joint venture bank, 100% foreign owned bank;
c. The curriculum vitae certified by the competent agency (the agency for which that person is working; the agency that manages, monitors personal curriculum vitae, etc…) and diplomas, certificates evidencing the capacity and professional qualification of members of the Board of Directors, Controllers Committee and General Manager (Manager) of the joint venture bank, 100% foreign owned bank;
d. List of capital contributors, level of charter capital contribution and specific capital contribution plan which is signed, undertaken by all parties and clearly states: value of contributed capital in foreign currency, in Vietnam Dong, in assets (for this case, it is required to provide a written document evidencing the valid ownership and valuation of assets);
e. Audited annual financial statements in the latest 3 years of capital contributors;
g. Joint venture contract containing major contents in accordance with provisions of applicable laws for joint venture bank; contract and agreement of capital contribution among capital contributors for 100% foreign owned bank;
h. Copy of the establishment and operation license of capital contributors;
i. Written document issued by the competent agency of its home country permitting such foreign bank to make capital contribution to the joint-venture bank; permitting the parent bank and other foreign capital contributors to make capital contribution to 100% foreign owned bank in Vietnam. Where the laws of its home country do not provide for such document to be issued, the evidence proving this fact shall be required;
k. Written document issued by the competent agency of its home country providing information of, confirming the compliance with the laws and financial status of the foreign bank, of other foreign capital contributors within the latest 3 consecutive years prior to the application for the license which evidences its ability to satisfy the conditions provided for in item a, c, point 5.1 mentioned above;
l. Written document issued by competent inspection, supervision agency of its home country undertaking to ensure the ability to supervise the entire activities of the foreign bank (including activity of the joint venture bank, 100% foreign owned bank in Vietnam) on the synthetic basis in accordance with international rules;
m. Written document or materials of international credit rating organizations (Moody’s, Standard & Poor, Fitch...) on credit rating for the foreign bank;
n. Charter on the organization and operation of capital contributors;
o. Draft Charter of the joint venture bank, 100% foreign owned bank;
p. Written commitment of capital contributors of:
- Being ready to give support to joint venture bank, 100% foreign owned bank in Vietnam in terms of finance, technology, management, execution and operation;
- Ensuring to maintain the actual value of the charter capital of joint venture bank, 100% foreign owned bank not to be lower than the legal capital and fully satisfy provisions on operational prudence in accordance with provisions of the State Bank.
q. General overview on the establishment history, development and operation process of capital contributors till the reporting time, and development orientation in the future.
6.3. Application file for the License of opening a representative office of foreign credit institution:
a. An application for the opening of the Representative Office in Vietnam which is signed by a competent representative of the foreign credit institution (Appendix 1d attached). The application for the opening of the representative office must clearly state the objective, scope of operation of the representative office;
b. A copy of the operation License of the foreign credit institution issued by the competent agency of its home country;
c. A written document issued by competent agency of its home country permitting such credit institution to open a Representative Office in Vietnam. Where the laws of its home country do not provide for such document to be issued, the evidence proving this fact shall be required;
d. A written document issued by the competent agency of the home country providing information of, confirming the compliance with provisions of applicable laws by the foreign credit institution;
e. Audited annual financial statements in the latest 3 consecutive years of the foreign credit institution;
g. Curriculum vitae of the Chief of the representative office in Vietnam (which is certified by the foreign credit institution);
h. General overview on the establishment history, development and operation process of the foreign credit institution till the reporting time, and development orientation in the future.
7. Procedures, process of licensing, content of the License
7.1. Application file for the issuance of the License shall be made into 2 sets, one in Vietnamese and one in English, of which:
a. The application file made in English must be legalized, except for following cases:
- The documents directly sent to the State Bank by the competent agency of the home country
- Annual financial statements are directly prepared in English
b. Vietnamese copies and the translations from English into Vietnamese must be certified by a Vietnam notary office in accordance with provisions of applicable laws on notary; especially for the translations of annual financial statements, it is acceptable for them to be certified by agencies, organizations which have translation competence and function. It is not required to translate Vietnamese documents, which are the original (or duplicated from the Vietnamese original) and prepared in Vietnam, into English.
7.2. Entire of the above original file shall be made in two (02) additional copies and sent to the State Bank (Banks and Non-banking Credit Institutions Department, hereinafter referred to as Banks Department). Within a period of 20 working days since the receipt of the file, the State Bank (Banks Department) shall make a written confirmation of the full receipt of file or give a notice of the file state and request to supplement information, file (in case of insufficiency and invalidity). Within a period of 10 working days after the receipt of additional information, file, the State Bank (Banks Department) shall make a written confirmation of the full receipt of file or keep giving a notice of the file state in accordance with hereinabove principles.
7.3. After the full receipt of application file for the License, the State Bank (Banks Department) shall send a written request for opinion about the proposal to issue the License to following agencies:
a. People’s committee of province, city under the central Government’s management where the branch, the bank or representative office is to be located;
b. Ministry of Public Security (Economic Security Department)
c. State Bank Inspectorate
d. State Bank branches in province, city where the branch, the bank or representative office is to be located.
Within a period of 30 working days (and 20 working days for the case of the application file for the opening of representative office) since the receipt of the document from the State Bank, related agencies mentioned above must give their written opinion to submit to the State Bank (Banks Department). Where it does not receive the written opinion of related agencies within this period, the State Bank shall consider that those agencies have no opinion against the application for the license issuance.
7.4. Within a period of 90 working days (30 working days for the case of the application file for the opening of representative office) from the full receipt of application file for a License, the State Bank shall either approve or refuse the issuance of the License. In case of refusal, the State Bank shall explain in writing the reasons thereof.
7.5. The State Bank shall specifically provide for the content and duration of operation in the License (under the Appendix 2a, 2b, 2c and 2d attached); the operation duration of a foreign bank branch, a joint venture bank and a 100% foreign owned bank shall not be in excess of 99 years at the maximum; the operation duration of a representative office of foreign credit institution shall not exceed 5 years at the maximum.
IV. EXTENSION OF OPERATION DURATION
8. Conditions to be extended the operation duration
8.1. Conditions for foreign bank branch, joint venture bank, 100% foreign owned bank operating in Vietnam:
a. To operate efficiently, gain profit; not to violate provisions on the prudence in banking activity; not to commit other serious law violations for the latest 3 consecutive years prior to the year applying for the extension till the time the State Bank considers the application file for the extension of operation duration;
b. Managerial, executive, internal audit apparatus and internal inspection, control system operates stably, safely, efficiently and in line with the laws.
8.2. Conditions for foreign bank
a. Always well performing commitments of the foreign bank for the branch, joint venture bank, 100% foreign owned bank which is operating in Vietnam;
b. The foreign bank is accepted by the competent agency of its home country to continue activities of the branch, joint venture bank, 100% foreign owned bank in Vietnam;
c. Competent inspection, supervision agency of its home country well performs the commitments with the State Bank of Vietnam of the coordination in the management, supervision and exchange of information relating to the supervision of banking activity;
d. Besides above mentioned conditions, the State Bank shall consider and issue the license of the extension of operation duration based on the conditions as applicable to the issuance of a new license (the first issuance of license) stipulated in point 1, 2 and 3 of paragraph 5, Section III mentioned above.
8.3. Conditions for representative office of a foreign credit institution:
a. Representative office does not commit serious law violation for at least 3 consecutive years prior to the year applying for the extension of operation duration till the time the State Bank considers application file for the extension of operation duration;
b. Besides above mentioned conditions, the State Bank shall consider and issue the license of the extension of operation duration based on the conditions applicable to the issuance of a new license (the first issuance of license) stipulated in point 5.4, Section III mentioned above.
9. Application file for the extension of the operation duration
a. An application for the extension of the operation duration signed by a competent representative of the foreign bank (parent bank), by foreign credit institution (for a foreign bank branch, representative office of foreign credit institution); by the Chairperson of the Board of Directors of 100% foreign owned bank, join venture bank (for 100% foreign owned bank, joint venture bank).
It is required to explain, clearly state, in the application, the ability as well as commitment to satisfy the conditions stated in paragraph 8, Section III mentioned above.
b. Resolution of the Board of Directors of 100% foreign owned bank, Board of Directors of the joint venture bank on continuing to extend the operation duration of 100% foreign owned bank, joint venture bank in Vietnam;
c. A general overview on the operation situation since the issuance of the License, which specifically states the situation of operation, business in the latest 3 years and plan of operation, business in coming period after the extension of the operation duration;
d. Audited annual financial statements of the latest 3 years of the foreign bank, foreign credit institution; other capital contributors in 100% foreign owned bank, joint venture bank.
e. Documents issued by the foreign competent agency:
- Permitting the foreign bank, foreign credit institution, other foreign capital contributors to continue activities of the foreign bank branch, joint venture bank, 100% foreign owned bank, representative office of foreign credit institution in Vietnam;
- Providing information of, confirming the compliance with the law and the financial state of the foreign bank, foreign credit institution, other foreign capital contributors within the latest 3 consecutive years prior to the application for the operation extension, which evidences the ability to satisfy the conditions provided for in item a, c, point 5.1, Section III mentioned above.
g. Other documents upon request of the State Bank.
10. Procedures, process of operation extension
a. Application file for the operation extension of foreign bank branch, joint venture bank, 100% foreign owned bank shall be submitted to the State Bank (Banks Department) at least 180 days, or 60 days for representative office of foreign credit institution, prior to the expiry of its operation duration;
b. The preparation of file, procedures and process of operation extension shall be performed as for the case of new license issuance stipulated in paragraph 7 Section III, Part I of this Circular. The State Bank, however, does not require the legalization, certification of the seal, signature for the file of operation extension, except for case where it is required for several important documents which need certifying according to the State Bank’s assessment.
V. LICENSING FEE AND FEE FOR THE OPERATION EXTENSION
11. Within a period of 15 working days from the date where the License is granted, or the operation extension is accepted, the joint-venture bank, 100% foreign owned bank, foreign bank branch, representative office of foreign credit institution shall be subject to the payment of fee for the license issuance, fee for operation extension at Banking Operation Department of the State Bank.
12. The fee level for issuance of a license or extension of operation duration shall be provided for by the Ministry of Finance. This fee shall not be deducted from the legal capital and refunded in any case.
VI. REGISTERING AND OPENING OF OPERATION
13. In order to carry out activities, foreign bank branch, joint venture bank, 100% foreign owned bank must fully satisfy the conditions for the opening of operation provided for in Article 15 of the Decree.
14. At least 30 days prior to the opening date, the foreign bank branch, the joint-venture bank, the 100% foreign owned bank shall make a written report to the State Bank (Banks Department, State Bank Inspectorate and State Bank branch in provinces, cities where the head office is located) on the opening date, its full satisfaction of the conditions for opening of operation, which include the condition of setting up an appropriate internal inspection, control system ensuring the efficient prevention and management of risk; at the same time inform the opening date to the Business Registration Agency, the People’s Committee in province, city under the central Government’s management where the branch and the bank is located, and to related agencies, organizations in accordance with provisions of applicable laws.
15. State Bank may require foreign bank branch, joint venture bank, 100% foreign owned bank to temporarily terminate, delay the carrying out of operation if, upon the consideration of the State Bank, they do not fully satisfy conditions for opening operation; especially where the internal inspection, control system, informatics and treasury system has not been ready for an efficient and prudential operation.
VII. DEALING WITH CASES WHERE THE ACTUAL VALUE OF APPROPRIATED CAPITAL OF FOREIGN BANK BRANCH, CHARTER CAPITAL OF JOINT VENTURE BANK, 100% FOREIGN OWNED BANK REDUCES LOWER THAN THE LEGAL CAPITAL
16. Joint venture bank, 100% foreign owned bank or parent bank (for the case of foreign bank branch) must ensure to make full contribution to the deficit charter capital, appropriated capital in comparison with the legal capital within 06 months since the date when the actual value of charter capital, appropriated capital reduces lower than the legal capital.
VIII. TRANSFORMING ORGANIZATION FORM FROM A JOINT VENTURE BANK INTO 100% FOREIGN OWNED BANK AND VICE VERSA
17. Conditions for the transformation
Cases of transformation must satisfy the conditions as for the case of issuing the establishment and operation License of the joint venture bank, 100% foreign owned bank as provided for in point 1 and point 3, Paragraph 5, Section III, Part I of this Circular.
18. Transformation file
18.1. Transforming a joint venture bank into a 100% foreign owned bank:
File for the transformation of a joint venture bank into a 100% foreign owned bank shall be prepared like the application file for the issuance of the establishment and operation License of the 100% foreign owned bank provided for in point 6.2, Section III, Part I of this Circular. Besides, the joint venture bank that has a demand for transformation must submit:
a. An application for the transformation of the joint venture bank into the 100% foreign owned bank signed by Chairman of the Board of Directors of the joint venture bank;
b. Minutes (or Resolution) of the meeting of the Board of Directors of the joint venture bank consenting to the transformation from the joint venture bank into the operation model of a 100% foreign owned bank;
c. Contract (or commitment) of the capital assignment of the Vietnamese party in the joint venture to the foreign assignee.
The capital assignment must ensure that a foreign bank shall be entitled to hold more than 50% of 100% foreign owned bank’s charter capital.
18.2. Transforming a 100% foreign owned bank into a joint venture bank:
File for the transformation of a 100% foreign owned bank into a joint venture bank shall be prepared like the application file for the issuance of the establishment and operation License of the joint venture bank provided for in point 6.2, Section III, Part I of this Circular. Besides, the 100% foreign owned bank that has a demand for transformation must submit:
a. An application for the transformation of the 100% foreign owned bank into a joint venture bank signed by Chairman of the Board of Directors of the 100% foreign owned bank;
b. Minutes (or Resolution) of the meeting of the Board of Directors of the 100% foreign owned bank consenting to the transformation from the 100% foreign owned bank into the operation model of a joint venture bank;
c. Contract (or commitment) of the capital assignment to the Vietnamese party in the joint venture;
The capital assignment must ensure the ratio as provided for in Article 46 of the Decree (the capital contribution level of the foreign party shall not exceed 50%, at the maximum, of the charter capital of the joint venture bank).
19. Procedures and process of transformation
19.1. The preparation of file, procedures and process of the issuance of transformation License shall be performed as for the case of issuing a new License provided for in paragraph 7, Section III, Part I of this Circular.
19.2. After receiving the new License and the decision on the revocation of the old license from the State Bank, the joint venture bank, 100% foreign owned bank shall publish in the paper to announce these contents and carry out procedures of business registration, carry out the opening of operation in accordance with provisions in Article 14, 15 of the Decree, provisions in Section VI, Part I of this Circular and related provisions of applicable laws.
IX. CURRENCY USED IN THE ACCOUNTING, FINANCE, REPORTING
20. The currency used for accounting shall be Vietnam Dong. Where the foreign bank branch, joint venture bank, 100% foreign owned bank has a demand for accounting in foreign currency for reporting to the Head Office of the foreign bank, it must submit a written request to the Ministry of Finance for the consideration, acceptance prior to the implementation.
21. The Ministry of Finance shall take responsibility for duplicating and sending the document of treatment result mentioned above to the State Bank for knowledge and cooperation in the management.
X. CHANGES THAT MUST BE ACCEPTED IN WRITING BY THE STATE BANK
22. Besides the changes which must be approved in writing by the State Bank, provided for in other parts of this Circular; the foreign bank branch, joint venture bank, 100% foreign owned bank must obtain written approval from the State Bank prior to changing its name, level of charter capital, appropriated capital; amending, supplementing its Charter; contents and scope of operation
23. File for the changes mentioned above shall be performed as follows:
23.1. For the case of changing the name
a. Application for the change of the name shall be signed by Chairman of the Board of Directors of the joint venture bank, 100% foreign owned bank, or competent person of the foreign bank (in respect of the foreign bank branch); the application should clearly state the reason for applying for changing the name; and proposal for the amendment of the Charter due to the change in the name of the joint venture bank, 100% foreign owned bank.
b. Resolution of the Board of Directors of the joint venture bank, 100% foreign owned bank on the change of name; a written approval by competent agency of the home country to the change in the foreign bank’s name (for foreign bank branch).
c. Other documents upon request of the State Bank in case of necessity.
23.2. Changing the charter capital, appropriated capital
a. Application for the change in the charter capital, appropriated capital shall be signed by the Chairman of the Board of Directors of the joint venture bank, 100% foreign owned bank, competent person of the foreign bank (in respect of the foreign bank branch); the application should clearly state the reason for the change (increasing, reducing capital), time for implementation, proposal for the amendment of the Charter (in respect of the joint venture bank, 100% foreign owned bank).
b. Resolution of the Board of Directors of the joint venture bank, 100% foreign owned bank consenting to the change in the charter capital level.
c. In the event where the 100% foreign owned bank, joint venture bank increases its capital due to the changes in members making capital contribution, it shall be required to supplement the file in accordance with provisions in Section VI, Part III on “File of the capital assignment to the new partner not belonging to the 100% foreign owned bank or the joint venture bank”.
d. Other documents upon request of the State Bank in case of necessity.
23.3. Amendment, supplement of contents, scope of operation
a. Application for the change, supplement of the content, scope of operation shall be signed by the Chairman of the Board of Directors of the joint venture bank, 100% foreign owned bank and by General Manager (Manager) of the foreign bank branch; the application should clearly state the reason, nature of the change, supplement the content, scope of operation, clearly state proposal on the amendment of the Charter (if any) due to this change.
b. Resolution of the Board of Directors of the joint venture bank, 100% foreign owned bank consenting to the change, supplement of the contents and scope of operation.
c. Other documents upon request of the State Bank in case of necessity.
23.4. Amendment, supplement of the Charter
a. Application for the amendment, supplement of the Charter shall be signed by the Chairman of the Board of Directors of the joint venture bank, 100% foreign owned bank; the application should clearly state the reason for the amendment, supplement of the Charter.
b. Resolution of the Board of Directors of the joint venture bank, 100% foreign owned bank consenting to the amended, supplemented contents of the Charter. (This provision is not applicable to the cases of amending, supplementing the Charter due to the changes mentioned in points 1, 2, 3 hereinabove of this paragraph).
c. Other documents upon request of the State Bank in case of necessity.
24. Procedures and process of settlement
a. Application files for the change mentioned above must be sent to the State Bank (Banks Department). Within a period of 30 working days since the full receipt of valid files, the State Bank shall either approve or refuse, in writing, requests for the change mentioned above. In case of refusal, the State Bank should clearly explain the reason thereof.
b. Within a period of 30 days since the receipt of the written approval from the State Bank, joint venture bank, 100% foreign owned bank, foreign bank branch shall carry out the registration for the change with business registration agency (in respect of the changes relating to the content of the business registration certificate), with other competent state agencies in accordance with provisions of applicable laws and publish the changed contents in 2 consecutive issues of a Central paper and a local paper.
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