Decree 13 on 17Mar99 on foreign credit institutions
GOVERNMENT
No. 13-1999-ND-CP Hanoi, 17 March 1999
DECREE ON ORGANIZATION AND OPERATION OF FOREIGN CREDIT INSTITUTIONS AND REPRESENTATIVE OFFICES OF FOREIGN CREDIT INSTITUTIONS IN VIETNAM
The Government
Pursuant to the Law on the Organization of the Government dated 30 September 1992;
Pursuant to the Law on the State Bank of Vietnam 01-1997-QH10 dated 12 December 1997;
Pursuant to the Law on Credit Institutions 02-1997-QH10 dated 12 December 1997;
On the proposal of the Governor of the State Bank;
Decrees:
CHAPTER I
General Provisions
Article 1
This Decree makes provisions on the organization and operation of foreign credit institutions and representative offices of foreign credit institutions in Vietnam.
Article 2
1. Foreign credit institutions shall be permitted to operate in Vietnam in the following forms:
(a) Foreign bank branches;
(b) Joint venture banks;
(c) Non-banking credit institutions: joint venture financial leasing companies; financial leasing companies with one hundred (100) per cent foreign owned capital; joint venture financial companies; financial companies with one hundred (100) per cent foreign owned capital and other non-banking credit institutions.
2. Foreign credit institutions shall be permitted to establish representative offices in Vietnam.
Article 3
The State Bank of Vietnam (hereinafter referred to as the State Bank) shall be the body which issues and withdraws licences and carries out administration and inspection of operations of foreign credit institutions in all forms operating in Vietnam. The issuance of licences shall be considered on the basis of the requirements of economic development and the financial market of Vietnam.
Article 4
1. A foreign bank branch is a subsidiary unit of a foreign bank which guarantees that it shall be responsible for all obligations and undertakings of the branch in Vietnam. The foreign bank branch shall have the rights and obligations stipulated by the laws of Vietnam and operate in accordance with the licence to establish a branch and other relevant laws of Vietnam.
2. Branches of the same foreign bank permitted to operate in Vietnam shall be independently organized subsidiary units of the foreign bank and shall be provided with operating capital by the foreign bank.
Article 5
1. A joint venture bank is a bank established by capital contributed by a Vietnamese party (including one or more Vietnamese banks) and a foreign party (including one or more foreign banks) on the basis of a joint venture contract. The joint venture bank shall be a Vietnamese legal entity with its head office located in Vietnam and operate in accordance with its establishment and operating licence and the relevant laws of Vietnam.
2. Branches of a joint venture bank are subsidiary units of the joint venture bank.
Article 6
1. A joint venture financial leasing company or a joint venture financial company is a non-banking credit institution established by capital contributed by a Vietnamese party and a foreign party on the basis of a joint venture contract and shall be a Vietnamese legal entity with its head office located in Vietnam and operate in accordance with its establishment and operating licence and the relevant laws of Vietnam.
2. A financial leasing company with one hundred (100) per cent foreign owned capital or a financial company with one hundred (100) per cent foreign owned capital is established by one hundred (100) per cent capital contributed by a foreign credit institution and shall be a Vietnamese legal entity with its head office located in Vietnam and operate in accordance with its establishment and operating licence and the relevant laws of Vietnam.
Article 7
A representative office of a foreign credit institution is a subsidiary unit of a foreign credit institution established in Vietnam and operating under the laws of Vietnam. The representative office of a foreign credit institution shall not be permitted to conduct business activities in Vietnam.
Article 8
1. A foreign competent supervision or inspection body or a foreign bank having a branch(es) in Vietnam shall be entitled to inspect or examine operations of a foreign bank branch(es) operating in Vietnam. Prior to carrying out an inspection or examination, the foreign supervision or inspection body or the foreign bank must notify the State Bank in writing of the contents, and the time of commencement and termination, of the inspection or examination.
2. Upon termination of the inspection or examination of the foreign bank branch(es) in Vietnam, the foreign competent supervision or inspection body or the foreign bank must report the results of the inspection or examination to the State Bank within a time-limit of thirty (30) days from the date of termination of the inspection or examination.
Article 9
1. Official correspondence of foreign credit institutions operating in Vietnam to State bodies of Vietnam must be prepared in Vietnamese, or in Vietnamese and a commonly used foreign language.
2. Application file documentation of foreign credit institutions for a licence must be prepared in Vietnamese and a commonly used foreign language.
CHAPTER II
Organization and Administration
Article 10
Foreign credit institutions shall be permitted to operate in Vietnam when they satisfy all conditions stipulated in article 106 of the Law on Credit Institutions and are issued by the State Bank with an establishment and operating licence, a licence to establish a branch, or a licence to establish a representative office (hereinafter referred to as a licence).
Article 11
1. The application file for a licence which shall be submitted by the foreign credit institution to the State Bank for consideration of issuance of a licence shall be prepared in accordance with article 108 of the Law on Credit Institutions.
2. The application file of a foreign credit institution for a licence must be prepared in two sets, one of which shall be in Vietnamese and one shall be in a commonly used foreign language. The set in a commonly used foreign language which is prepared and certified in a foreign country must be duly certified by a consulate. Copies of Vietnamese documents and Vietnamese translations of documents in a foreign language must be certified by a Vietnamese notary public.
Article 12
The duration of operation of foreign credit institutions in Vietnam shall be stipulated in the licence as follows:
1. Foreign bank branches: no more than twenty (20) years;
2. Joint venture banks, joint venture financial companies and financial companies with one hundred (100) per cent foreign owned capital: no more than thirty (30) years;
3. Joint venture financial leasing companies and financial leasing companies with one hundred (100) per cent foreign owned capital: no more than fifty (50) years;
4. Representative offices of foreign credit institutions: no more than five (5) years.
Article 13
1. Where a foreign credit institution wishes to extend the duration of its operation in Vietnam, the State Bank may so consider on a case-by-case basis; the length of each extended period shall not exceed the duration stated in the previous licence.
2. The foreign credit institution wishing to extend the duration of its operation in Vietnam shall submit an application and a file for extension of the duration of operation at least one hundred and eighty (180) days in the case of foreign credit institutions stipulated in clause 1 of article 2 of this Decree, and thirty (30) days in the case of representative offices of foreign credit institutions, prior to expiry of the duration of operation stipulated in the licence.
Article 14
1. A representative office of a foreign credit institution operating in Vietnam shall terminate its operation in the following cases:
(a) Expiry of the duration of operation stipulated in the licence. The State Bank shall notify the representative office in writing of the termination of its operation in Vietnam.
(b) Voluntary termination of operation. In this case, the foreign credit institution must submit a request to the State Bank at least sixty (60) days prior to the proposed date of termination of the operation.
(c) Withdrawal of the licence in any of the circumstances stipulated in sub-clauses (a), (b) and (dd) of clause 1 of article 29 of the Law on Credit Institutions and upon declaration of bankruptcy of the foreign credit institution.
(d) Any foreign credit institution which has been issued with an operating licence in accordance with clause 1 of article 2 of this Decree, if it has a representative office established in the same locality (namely, the province or city under central authority), must terminate the operation of its representative office.
2. Prior to termination of operation, the representative office of the foreign credit institution must perform all obligations and procedures in accordance with law.
3. The representative office of the foreign credit institution must return the licence and the certificate of operation registration to the Vietnamese body which issued the licence or certificate of operation registration, no later than the date of termination of operation.
Article 15
Upon dissolution or declaration of bankruptcy of a foreign bank, its branch operating in Vietnam must terminate its operation. Prior to termination of operation, the foreign bank must perform all obligations and complete all necessary procedures in accordance with the laws of Vietnam and the guidelines of the State Bank.
Article 16
Within a time-limit of twelve (12) months from the date of issuance of the licence, foreign bank branches, joint venture banks, joint venture non-banking credit institutions and non-banking credit institutions with one hundred (100) per cent foreign owned capital and representative offices of foreign credit institutions must commence operation.
Article 17
At least thirty (30) days prior to the date of commencement of operation, a foreign credit institution which has been issued with a licence in accordance with clause 1 of article 2 of this Decree shall publish an announcement in five consecutive issues of a local and central newspaper(s) in the locality where its office is located. The contents of the announcement shall be the main information stipulated in the licence and the certificate of business registration and the date of commencement of operation.
Article 18
1. A foreign credit institution operating in Vietnam which is issued with a licence shall pay a fee in US dollars. Rates of fees for issuance and extension of a licence shall be provided for as follows:
(a) Licence to establish a representative office of a foreign credit institution: United States dollars (USD) five thousand (5,000);
(b) Licence to establish a foreign bank branch or an establishment and operating licence of a joint venture bank: USD thirty thousand (30,000);
(c) Establishment and operating licence of a joint venture non-banking credit institution or non-banking credit institution with one hundred (100) per cent foreign owned capital: USD ten thousand (10,000);
(d) Licence to establish a joint venture bank branch: USD five thousand (5,000);
(dd) Licence to establish a branch of a non-banking credit institution: USD five thousand ( 5,000);
(e) Licence to establish a representative office of a non-banking credit institution: USD three thousand (3,000).
2. Procedures for payment of fees for issuance of a licence shall be carried out in accordance with guidelines of the State Bank.
Article 19
Foreign credit institutions operating in Vietnam shall be permitted to import furniture and equipment for direct use in their operations in accordance with law.
Article 20
1. A foreign bank shall be permitted to establish branches in provinces and cities under central authority, but shall not be permitted to establish subsidiary branches of such branches. The foreign bank shall not be permitted to establish any representative office in the locality where its branch has been established. A foreign bank branch shall not be permitted to establish transaction offices in any form outside the office of its branch.
2. Joint venture banks shall be permitted to establish transaction offices in provinces and cities under central authority where the head office and branches are located in accordance with articles 32 and 33 of the Law on Credit Institutions.
3. Non-banking credit institutions shall be permitted to establish branches and representative offices in province and cities under central authority in accordance with articles 32 and 33 of the Law on Credit Institutions.
4. Files and procedures for application for establishment of transaction offices, branches and representative offices referred to in clauses 2 and 3 of this article shall be stipulated by the State Bank.
Article 21
Management, administration, control, inspection and internal auditing of foreign credit institutions operating in Vietnam shall be carried out in accordance with clauses 3 and 4 of Chapter II of the Law on Credit Institutions.
Article 22
1. Each foreign bank branch shall have a general director (or director) for day-to-day management.
2. The appointment or removal of the general director (or director) of a foreign bank branch shall be authorized by the foreign bank and approved by the Governor of the State Bank.
Article 23
1. The leading body of a joint venture bank or a joint venture non-banking credit institution shall be the board of management. The board of management shall consist of a chairman, vice-chairman(men) and other members. The number of members of the board of management of the joint venture credit institution shall depend on the capital contribution of each of the foreign party and the Vietnamese party to the joint venture credit institution. Where each party to the joint venture is a credit institution, each party shall have at least two members on the board of management. Where there are several credit institutions participating in the joint venture, each credit institution shall have at least one member on the board of management.
2. The term of office of the board of management shall be agreed by the parties to the joint venture bank or the joint venture non-banking credit institution, but shall not exceed five years.
3. The general director or the first deputy general director of the joint venture bank or joint venture non-banking credit institution shall be a representative of the Vietnamese party.
4. The duties and powers of the chairman of the board of management, the general director and the first deputy general director shall be stated in the charter of the joint venture bank or joint venture non-banking credit institution.
Article 24
1. The general director of a non-banking credit institution with one hundred (100) per cent foreign owned capital shall be the representative of the credit institution and shall be responsible before the laws of Vietnam for all operations of the credit institution.
2. The duties and powers of the general director shall be stated in the charter of the non-banking credit institution with one hundred (100) per cent foreign owned capital.
Article 25
1. Foreign credit institutions shall be permitted to establish representative offices in various provinces and cities under central authority of Vietnam and shall be permitted to establish only one representative office in each province or city.
2. Each representative office of a foreign credit institution in Vietnam shall have its own chief representative.
Article 26
1. The ratios of legal capital contribution of the foreign party and Vietnamese party to a joint venture bank shall be agreed by the parties and approved by the State Bank upon issuance of a licence. In respect of joint venture banks conducting commercial banking activities, the share of capital contribution of the foreign party shall not exceed fifty (50) per cent of the legal capital of the joint venture bank.
2. The share of capital contribution of the foreign party to a joint venture non-banking credit institution shall not be less than thirty (30) per cent of the legal capital.
3. Where part of the legal capital is contributed in kind, the joint venture bank or joint venture non-banking credit institution shall present documents evidencing the legal ownership and the value of the contribution in kind to the State Bank. The value of capital contribution in kind shall be determined on the basis of the market value at the time of the capital contribution and be supported by a certificate of appraisal issued by an independent appraisal organization.
Article 27
1. The Vietnamese party and the foreign party to a joint venture credit institution shall be entitled to assign their respective capital contributions provided that they must comply with article 26 of this Decree and give priority to assignment to the other parties to the joint venture credit institution. Where the assignment is made to an organization outside the joint venture, the terms and conditions of the assignment shall not be more favourable than the case where an assignment is made to a party to the joint venture credit institution. Any assignment of capital must be agreed by the parties to the joint venture credit institution.
2. A non-banking credit institution with one hundred (100) per cent foreign owned capital shall have the right to assign its capital, but shall give priority to Vietnamese organizations.
3. The ratio and terms and conditions of an assignment of capital in a joint venture bank or joint venture non-banking credit institution must be specified in the charter of the credit institution in compliance with the laws. Where the ratio of the legal capital to be assigned exceeds the stipulated limit, the assignment of capital shall only become effective upon approval of the State Bank.
4. Where profits are derived from the assignment of capital, the assignor must pay tax in accordance with the laws of Vietnam.
Article 28
The parties to a joint venture bank or joint venture non-banking credit institution shall be entitled to the distribution of profits and shall bear the risks of the joint venture credit institution in accordance with the ratio of capital contribution of each party, unless otherwise agreed by the parties in the joint venture contract.
Article 29
The legal capital or allocated capital of foreign credit institutions operating in Vietnam must be reflected in full in their balance sheets.
CHAPTER III
Activities
Article 30
A foreign bank branch may engage in any or all of the following activities:
1. Receiving on-call or fixed deposits in accordance with the regulations of the State Bank; but not permitted to receive savings in any form;
2. Issuing certificates of deposit and valuable papers;
3. Borrowing loans from credit institutions in and outside Vietnam;
4. Borrowing short term loans from the State Bank;
5. Providing short, medium and long term loans;
6. Discounting, re-discounting and pledging negotiable instruments and valuable papers;
7. Providing bank guarantees;
8. Dealing in foreign currency;
9. Providing payment and budgetary services;
10. Opening deposit accounts at foreign credit institutions in accordance with the regulations of the State Bank;
11. Acting as agent in payment of credit cards;
12. Conducting payment and collection operations on behalf of their clients;
13. Providing trust services and asset management services;
14. Providing consultancy services in relation to monetary and financial matters.
Article 31
A joint venture bank may engage in any or all of the following activities:
1. Receiving on-call or fixed deposits;
2. Issuing certificates of deposit and valuable papers;
3. Borrowing loans from credit institutions in and outside Vietnam;
4. Borrowing short term loans from the State Bank;
5. Providing short, medium and long term loans;
6. Discounting, re-discounting and pledging negotiable instruments and valuable papers;
7. Providing bank guarantees;
8. Dealing in foreign currency;
9. Providing payment and budgetary services;
10. Opening deposit accounts at foreign credit institutions in accordance with the regulations of the State Bank;
11. Acting as agent in payment of credit cards;
12. Conducting payment and collection operations on behalf of their clients;
13. Providing trust services and asset management services;
14. Providing consultancy services in relation to monetary and financial matters.
Article 32
A joint venture financial leasing company or financial leasing company with one hundred (100) per cent foreign owned capital may engage in any or all of the following activities:
1. Receiving fixed deposits for a term of one year or more; not permitted to receive on-call deposits or savings;
2. Issuing certificates of deposit and valuable papers;
3. Borrowing loans from credit institutions in and outside Vietnam;
4. Carrying out financial leasing;
5. Providing bank guarantees;
6. Providing consultancy services and other services relating to financial leasing;
7. Providing trust services and asset management services.
Article 33
A joint venture financial company or financial company with one hundred (100) per cent foreign owned capital may engage in any or all of the following activities:
1. Receiving fixed deposits for a term of one year or more; not permitted to receive on-call deposits or savings;
2. Issuing certificates of deposit and valuable papers;
3. Borrowing loans from credit institutions in and outside Vietnam;
4. Providing short, medium and long term loans;
5. Discounting, re-discounting and pledging negotiable instruments and valuable papers;
6. Providing bank guarantees;
7. Dealing in foreign currency;
8. Providing trust services and asset management services;
9. Providing consultancy services in relation to monetary and financial matters.
Article 34
A representative office of a foreign credit institution may, on the basis of the contents of the licence issued by the State Bank, either partly or fully engage in any or all of the following activities:
1. Acting as a liaison office;
2. Conducting market research;
3. Expediting the development of investment projects of the foreign credit organization in Vietnam;
4. Expediting and supervising the implementation of contracts or agreements entered into between the foreign credit institution and any Vietnamese credit institutions and Vietnamese enterprises, and the implementation of projects in Vietnam financed by the foreign credit institution;
5. Carrying out other activities in accordance with the laws of Vietnam as permitted by the State Bank.
Article 35
When it requests and obtains the permission of the State Bank, a foreign bank branch, joint venture bank or non-banking credit institution shall be permitted to carry out other activities in accordance with the relevant laws of Vietnam.
Article 36
1. The State Bank shall specify the authorized activities to be carried out in Vietnam in the licence which is issued to a foreign bank branch, joint venture bank or non-banking credit institution, on the basis of the form and size of the licensed credit institution.
2. All adjustments and additions to the licence issued to a foreign credit institution operating in Vietnam shall be made by the State Bank.
Article 37
During operation, a foreign credit institution operating in Vietnam shall comply with the regulations on limits in order to ensure safety in activities of the credit institution in accordance with Section V of Chapter III of the Law on Credit Institutions.
Article 38
1. Foreign bank branches, joint venture banks and non-banking credit institutions operating in Vietnam shall be obliged to conduct cost accounting on the basis of the accounting system stipulated by the State Bank and to use vouchers and to prepare accounting reports and financial statements in accordance with the regulations of the State Bank.
2. Currency units used for cost accounting purposes shall be the Vietnamese dong. Where a foreign credit institution operating in Vietnam is required to conduct cost accounting in a foreign currency for the purpose of preparing statements for the head office of the foreign credit institution, the approval of the State Bank shall be required.
CHAPTER IV
Implementing Provisions
Article 39
This Decree shall be of full force and effect after fifteen (15) days from the date of its signing and shall replace all previous legal instruments which are inconsistent with this Decree.
Article 40
Foreign bank branches, subsidiary branches of foreign banks, joint venture banks, non-banking credit institutions and representative offices of foreign credit institutions which are currently operating in Vietnam shall adjust their organization and operation in accordance with this Decree and the regulations of the State Bank.
Article 41
The Governor of the State Bank shall be responsible for providing guidelines for the implementation of this Decree.
On behalf of the Government
Prime Minister
PHAN VAN KHAI
