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Draft Decree on Licensing Conditions for Credit Institutions and Foreign Bank BranchesThe State Bank of Vietnam is drafting a decree proposing regulations on licensing conditions for founders of joint-stock commercial banks, owners of 100% foreign-owned banks, founding members of joint-venture banks, parent banks of foreign bank branches, and non-bank credit institution founders. |
Conditions for Founders of Joint-Stock Commercial Banks
1. The founder must not be a founder, owner, founding member, or strategic shareholder of another credit institution.
2. Founders must collectively hold a minimum of 50% of the charter capital when establishing the joint-stock commercial bank, with a minimum of 50% of the total shares held by founder legal entities.
In addition to the above requirements, individual founders must meet the following conditions:
– Vietnamese citizenship, full civil act capacity, and no restrictions under the Enterprise Law and the Law on Cadres and Civil Servants.
– Capital contribution must not come from mobilized capital, loans from organizations or individuals, or enterprise bond issuance.
– Either a manager of a profitable business for at least three consecutive years before the year of the license application or a holder of a bachelor’s or higher degree in economics or law.
Along with the conditions mentioned in points 1 and 2, organizational founders must meet these criteria:
– Established under Vietnamese law, with capital contributions not coming from mobilized capital, loans, or enterprise bond issuance.
– Full compliance with tax and social insurance obligations up to the time of submitting the license application.
– Minimum owner’s equity of VND 500 billion in the five years preceding the year of the license application and profitability during the same period.
For businesses in industries with statutory capital requirements, the owner’s equity minus the statutory capital must be at least equal to the committed capital contribution, as per audited financial statements for the year preceding the license application.
State-owned enterprises must obtain written approval from authorized authorities to participate in founding joint-stock commercial banks, following relevant legal regulations.
Organizations licensed to operate in banking, securities, or insurance must comply with capital contribution regulations in their respective fields.
Commercial banks must have total assets of at least VND 100,000 billion, fully comply with risk management and provisioning regulations at the time of the license application and issuance, and maintain compliance with safety ratios in the year preceding the application and up to the issuance.
Conditions for Owners of 100% Foreign-Owned Banks
1. No serious violations of banking regulations or other legal provisions in the country where the credit institution is headquartered in the five years preceding the license application and up to the issuance.
2. International experience and a credit rating from international rating organizations as follows:
a. A credit rating of at least AA- (according to Standard & Poor’s or Fitch Ratings) or Aa3 (according to Moody’s) as of the latest assessment before the license application. If the international rating organization uses a different rating system, they must convert it to correspond with the ratings of Standard & Poor’s, Moody’s, or Fitch Ratings.
b. A stable or better outlook for the credit rating mentioned in point a.
3. Profitability in the five years preceding the license application and up to its issuance.
4. Total assets of at least USD 10 billion as of the end of the year preceding the license application.
5. Compliance with capital adequacy ratios, other safety ratios, risk management regulations, and provisioning requirements, as assessed by the competent authority of the country where the credit institution is headquartered, in the year preceding the license application and up to its issuance.
6. The owner must not be an owner, founding member, or strategic shareholder of any other Vietnamese credit institution.
7. Within five years from the license grant, the founding members must collectively own 100% of the charter capital of the 100% foreign-owned bank.
