Circular No. 27/2018/TT-NHNN stipulates cases for freezing and lifting the freeze on capital and assets of foreign bank branches

CIRCULAR

Regulations on the cases of freezing and lifting the freeze on capital and assets of foreign bank branches

of a foreign bank branch

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

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions dated November 20, 2017;

Pursuant to Government Decree No. 16/2017/NĐ-CP dated February 17, 2017 on the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of Banking Inspection and Supervision;

The Governor of the State Bank of Vietnam issues this Circular regulating the cases of freezing and lifting the freeze on capital and assets of foreign bank branches.

Article 1. Scope of Regulation

This Circular regulates the cases of freezing and lifting the freeze on capital and assets of foreign bank branches.

Article 2. Applicability

1. Foreign bank branches established and operating within the territory of Vietnam.

2. Individuals and organizations related to the freezing and lifting the freeze on capital and assets of foreign bank branches.

Article 3. Explanation of Terms

1. Freezing capital and assets means the State Bank of Vietnam (hereinafter referred to as the State Bank) implements one or more of the following methods:

a) Requesting foreign bank branches not to transfer capital and assets abroad;

b) Freezing capital and assets of foreign bank branches deposited with the State Bank;

c) Requesting foreign bank branches to deposit capital and assets with the State Bank and freezing such capital and assets;

d) Requesting credit institutions where foreign bank branches have deposited capital and assets to freeze such capital and assets;

đ) Requesting foreign bank branches to deposit capital and assets with a credit institution and requesting that credit institution to freeze such capital and assets.

2. The parent bank is a foreign bank having a branch in Vietnam.

Article 4. Principles for implementing the freezing and lifting of the freeze on capital and assets

1. The freezing and lifting of the freeze on capital and assets of foreign bank branches aims to protect the interests of depositors.

2. The Governor of the State Bank considers and issues a Decision to freeze capital and assets of foreign bank branches when such branches fall under one or more of the cases stipulated in Article 5 of this Circular. The Decision to freeze capital and assets clearly states the reasons for the freeze, the start date of the freeze, the method of freezing, and the responsibilities of the foreign bank branch.

3. The Governor of the State Bank considers and issues a Decision to lift the freeze on capital and assets of foreign bank branches when such branches fall under the cases stipulated in Article 6 of this Circular. The Decision to lift the freeze on capital and assets clearly states the end date of the freeze and the responsibilities of the foreign bank branch.

Article 5. Cases of freezing capital and assets

The State Bank considers and decides to freeze capital and assets of foreign bank branches in the following cases:

1. The actual value of the authorized capital of foreign bank branches continuously falls below the statutory capital requirement for more than six months.

2. Violation of the safety ratio in banking operations as prescribed in Article 130 of the Law on Credit Institutions, and the State Bank has issued a written request for rectification but no measures have been taken or such measures have not been effective within the time limit set by the State Bank.

3. The cumulative loss of foreign bank branches exceeds 50% of the value of the authorized capital and reserves recorded in the most recent audited financial report.

4. The State Bank has requested but the parent bank has not fulfilled its commitments regarding the operation of the branch in Vietnam.

5. When there is information indicating that the parent bank shows signs of inability to pay, inability to settle debts, or has been placed under special supervision by the competent authority of the home country, or has been required to be dissolved, liquidated, declared bankrupt, or had its license revoked.

Article 6. Cases for terminating the freezing of capital and assets

The State Bank shall examine and decide to terminate the freezing of capital and assets of foreign bank branches in the following cases:

1. The foreign bank branch has remedied the violations and issues specified in Clause 1, Clause 2, and Clause 3 of Article 5 of this Circular.

2. The parent bank has fulfilled all obligations it committed to the foreign bank branch as required by the State Bank under Clause 4 of Article 5 of this Circular.

3. The State Bank receives information from the competent authority of the home country regarding the parent bank having remedied the issues specified in Clause 5 of Article 5 of this Circular.

Article 7. Responsibilities of foreign bank branches

1. Provide complete, truthful, accurate, and timely information and documents on the current organizational structure and operations when requested by the State Bank if the foreign bank branch exhibits signs of being subject to the freezing of capital and assets as stipulated in Article 5 of this Circular.

2. Comply with the Decision of the State Bank in cases where the capital and assets are frozen.

Article 8. Responsibilities of credit institutions requested by the State Bank to implement the freezing and termination of the freezing of capital and assets of foreign bank branches

Implement the freezing and termination of the freezing of capital and assets of foreign bank branches according to the Decision of the State Bank.

Article 9. Responsibilities of units under the State Bank

1. Banking Inspection and Supervision Authority

a) Serve as the focal point for receiving relevant information and submit to the Governor for examination and decision on the freezing or termination of the freezing of capital and assets of foreign bank branches;

b) Take the lead and coordinate with units under the State Bank to handle issues arising during the process of freezing and terminating the freezing of capital and assets of foreign bank branches.

2. Trading Department Implement the freezing and termination of the freezing of capital and assets of foreign bank branches according to the Decision of the State Bank.

3. Financial Accounting Department Serve as the focal point for guiding accounting entries arising during the process of freezing and terminating the freezing of capital and assets of foreign bank branches.

4. Units under the State Bank

a) Provide information to the Banking Inspection and Supervision Authority upon discovering that a foreign bank branch exhibits signs of being subject to the freezing of capital and assets as stipulated in Article 5 of this Circular;

b) Coordinate with the Banking Inspection and Supervision Authority to handle issues arising during the process of freezing and terminating the freezing of capital and assets of foreign bank branches.

Article 10. Effective Date

1. This Circular takes effect from January 10, 2019.

2. Repeal Section VI Part II of Circular No. 03/2007/TT-NHNN dated June 5, 2007 issued by the Governor of the State Bank guiding the implementation of certain provisions of Decree No. 22/2006/NĐ-CP dated February 28, 2006 of the Government on the organization and operation of foreign bank branches, joint venture banks, wholly foreign-owned banks, and representative offices of foreign credit institutions in Vietnam.

Article 11. Implementation Organization

The Director of the Office, the Director of the Banking Inspection and Supervision Authority, the Heads of units related to the State Bank, the Governors of the State Bank branches in provinces and centrally-administered cities, and the General Directors (Directors) of foreign bank branches are responsible for organizing the implementation of this Circular./.