Decision No. 90/2001/QD-NHNN on the establishment, opening, and termination of operations of trading offices, branches, representative offices, and non-business units of commercial banks.

Pursuant to …;

Issuing Provisions on the Establishment, Operation, and Termination of Trading Departments, Branches, Representative Offices, and Non-Business Units of Commercial Banks

 Trading Departments, Branches, Representative Offices, Non-Business Units of Commercial Banks

________________________

GOVERNOR OF THE STATE BANK OF VIETNAM

Based on the Law on the State Bank of Vietnam No. 01/1997/QH10 and the Law on Credit Organizations No. 02/1997/QH10 dated December 12, 1997;

BASED ON THE GOVERNMENT DECREE NO. 49/2000/NĐ-CP DATED SEPTEMBER 12, 2000 ON THE ORGANIZATION AND OPERATIONS OF COMMERCIAL BANKS;

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government on the tasks, powers, and responsibilities for state management of Ministries and ministerial-level agencies;

At the proposal of the Director of the Department of Banks and Non-Bank Credit Institutions;

Pursuant to …;

Article 1. These Provisions on the Establishment, Operation, and Termination of Trading Departments, Branches, Representative Offices, and Non-Business Units of Commercial Banks are hereby issued together with this Decision.

Article 2. This Decision shall take effect fifteen days from the date of signature and shall replace the provisions in the following documents:

1. Decision No. 175/QĐ-NH5 dated July 3, 1996 of the Governor of the State Bank of Vietnam promulgating the Regulations on the Establishment, Operation, and Termination of Domestic Branches and Representative Offices of Joint Stock Commercial Banks of Vietnam.

2. Other documents issued by the State Bank of Vietnam related to the establishment, operation, and termination of trading departments, branches, representative offices, and non-business units of commercial banks that conflict with this Decision.

Article 3. The Heads of the Office, Department Heads of Banking and Non-Bank Credit Institutions, Heads of Units under the State Bank of Vietnam, Directors of Provincial and Municipal Branches of the Central Bank, Chairmen of the Boards of Management and General Managers (Directors) of commercial banks are responsible for implementing this Decision./.

REGULATIONS

On the Establishment, Operation, and Termination of Trading Departments, Branches,

Representative Offices, Non-Business Units of Commercial Banks

________________________

(Issued together with Decision No. 90/2001/QĐ-NHNN

 dated February 7, 2001 of the Governor of the State Bank of Vietnam)

PART I

GENERAL PROVISIONS

Article 1.

Commercial banks shall carry out the establishment, operation, and termination of trading departments, branches, representative offices, and non-business units in accordance with these Provisions.

Article 2.

In these provisions, the following terms are understood as follows:

1. A trading department of a commercial bank is a dependent unit, having a seal, tasked with performing part of the activities of the commercial bank and certain functions related to branches pursuant to the authorization of the commercial bank.

2. A branch of a commercial bank is a dependent unit, having a seal, tasked with performing part of the activities of the commercial bank pursuant to the authorization of the commercial bank (hereinafter referred to as a first-level branch).

3. A branch of a first-level branch is a dependent unit of the first-level branch, having a seal, tasked with performing part of the activities of the first-level branch pursuant to the authorization of the first-level branch (hereinafter referred to as a second-level branch).

4. A branch of a second-level branch is a dependent unit of the second-level branch, having a seal, tasked with performing part of the activities of the second-level branch pursuant to the authorization of the second-level branch (hereinafter referred to as a third-level branch).

5. A representative office of a commercial bank is a dependent unit, having a seal, tasked with representing the commercial bank pursuant to its authorization. A representative office shall not engage in business operations.

6. A non-business unit of a commercial bank is a dependent unit, having a seal, tasked with conducting research, applying banking technology, training and enhancing skills for bank staff, and performing other tasks assigned by the commercial bank in compliance with the law.

Article 3.

After receiving written approval from the State Bank of Vietnam, a commercial bank shall decide:

a) To establish a trading department;

b) To establish a first-level branch within the country, abroad, at locations where there is a need for operations, including the headquarters location;

c) To establish a representative office within the country and abroad;

d) To establish a non-business unit;

đ) To divide, separate, merge, or consolidate first-level branches;

e) To terminate the operations of trading departments, first-level branches, representative offices, and non-business units when there is no operational need.

Chapter II

ESTABLISHING TRADING DEPARTMENTS, BRANCHES, REPRESENTATIVE OFFICES;

ESTABLISHING NON-BUSINESS UNITS

SECTION I. RULES FOR ESTABLISHING BRANCHES, HEAD OFFICES, REPRESENTATIVE OFFICES, AND NON-BUSINESS UNITS

OF COMMERCIAL BANKS

Article 4.

Commercial banks may establish branches, head offices, representative offices, and non-business units in accordance with Article 3 of this Regulation when they meet the following conditions:

1. Having at least three years of operation from the date of commencement.

2. Generating profit in the two most recent years. The overdue loan ratio at the end of the previous quarter must be below 5%.

For commercial banks established before the effective date of Decree No. 82/1998/NĐ-CP dated October 3, 1998, issued by the Government on the list of minimum statutory capital for commercial banks, they must have a minimum charter capital equal to the statutory capital.

3. The management structure, operational system, and internal audit system must operate effectively.

4. Information systems meeting management requirements.

5. Not violating banking activity safety regulations:

a) Situations where loans cannot be granted;

b) Credit restrictions;

c) Loan and guarantee limits;

Subparagraph d. Limits on equity investment and share purchases.

Subparagraph đ. Safety ratios.

Subparagraph e. Risk reserves.

6. Not violating other legal provisions.

PART II. DOCUMENTATION AND PROCEDURES FOR ESTABLISHING BRANCHES, HEAD OFFICES, REPRESENTATIVE OFFICES, AND NON-BUSINESS UNITS

Article 5.

The application documents for the State Bank's approval to establish domestic branches, head offices, and representative offices of commercial banks include:

1. A letter from the Chairman of the Board of Directors or their authorized representative requesting the State Bank's approval to establish domestic branches, head offices, and representative offices of commercial banks, which must outline the necessity, name, location, content, and scope of operations of the branches, head offices, and representative offices, and the commercial bank must affirm that it meets the required conditions for establishment.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. The Board of Directors' resolution on establishing branches, head offices, and representative offices.

4. A proposal for establishing branches, head offices, and representative offices, detailing the necessity, demand for banking activities, market research in the area; organizational structure, content, and scope of operations; and a three-year business plan.

5. Certified copies of the financial reports of the commercial bank for the two most recent years, accompanied by an independent auditor's report.

6. A document from the People's Committee of the province or city where the commercial bank plans to establish its branch, head office, or representative office, permitting the establishment of such facilities in the area.

(In cases where the People's Committee of the province or city does not provide comments or only provides comments after the State Bank has issued an approval document for the establishment of branches, head offices, and representative offices, the commercial bank must clearly state this in the Chairman of the Board of Directors' letter for the State Bank to consider).

7. A document from the Governor of the State Bank Branch in the province or city where the commercial bank plans to establish its branch, head office, or representative office regarding the necessity and operating area of the branch, head office, or representative office, except for state-owned joint-stock commercial banks (hereinafter referred to as joint-stock commercial banks) establishing branches, head offices, or representative offices with the headquarters located in the same province or city as the main office of the joint-stock commercial bank.

Article 6.

Application documents for the State Bank's approval to establish overseas branches and representative offices of commercial banks include:

1. A letter from the Chairman of the Board of Directors or their authorized representative requesting the State Bank's approval to establish overseas branches and representative offices of commercial banks, which must outline the necessity, ability to meet the conditions for establishing foreign branches and representative offices, proposed locations for branches and representative offices; name, location, and content of operations of the branches and representative offices.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. The Board of Directors' resolution on establishing overseas branches and representative offices.

4. A proposal for establishing overseas branches and representative offices, detailing the need for banking activities, market research; organizational structure and content of operations; and a three-year business plan.

5. Certified copies of the financial reports of the commercial bank for the two most recent years, accompanied by an independent auditor's report.

Article 7.

Application documents for the State Bank's approval to establish non-business units of commercial banks include:

1. A letter from the Chairman of the Board of Directors or their authorized representative requesting the State Bank's approval to establish non-business units of commercial banks, which must outline the necessity, name, location, content, and scope of operations of the non-business unit, and the commercial bank must affirm that it meets the required conditions for establishment.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. The Board of Directors' resolution on establishing non-business units.

4. A proposal for establishing non-business units, detailing the necessity of establishing a non-business unit, the name, location of the headquarters of the non-business unit, organizational structure, content, and scope of operations of the non-business unit; and a three-year business plan.

5. A document from the People's Committee of the province or city where the commercial bank plans to establish the non-business unit's headquarters, permitting the establishment of the non-business unit's headquarters.

(In cases where the People's Committee of the province or city does not provide comments or only provides comments after the State Bank has issued an approval document for the establishment of non-business units, the commercial bank must clearly state this in the Chairman of the Board of Directors' letter for the State Bank to consider).

6. Certified copies of the financial reports of the commercial bank for the two most recent years, accompanied by an independent auditor's report.

Article 8.

Procedures and formalities for requesting the State Bank's approval to establish branches, head offices, representative offices, and non-business units of commercial banks:

1. A joint-stock commercial bank shall submit two sets of documents for opening a trading office, first-level branch, representative office, or establishing a public service unit to the Branch of the State Bank of Vietnam in the province or city where the head office of the bank is located.

Within a maximum period of 15 working days from the date of receiving all necessary documents, the Branch of the State Bank of Vietnam in the province or city must provide its written opinion on the conditions and documents required for opening a trading office, first-level branch, representative office, or establishing a public service unit as stipulated in Articles 4, 5, 6, and 7 of this Regulation, and send them along with one set of the joint-stock commercial bank's documents to the State Bank of Vietnam (Department of Banks and Non-Bank Financial Institutions).

2. A state-owned commercial bank shall submit one set of documents for opening a trading office, first-level branch, representative office, or establishing a public service unit to the State Bank of Vietnam (Department of Banks and Non-Bank Financial Institutions).

3. Within a maximum period of 30 working days from the date of receiving all necessary documents of the state-owned commercial bank, or 15 working days from the date of receiving the documents of the joint-stock commercial bank forwarded by the Branch of the State Bank of Vietnam in the province or city, the State Bank of Vietnam shall examine and issue its approval or disapproval for the opening of a trading office, first-level branch, representative office, or establishment of a public service unit by the commercial bank. In case of disapproval, the State Bank of Vietnam shall issue a document clearly stating the reasons.

4. For the opening of branches or representative offices abroad, the Governor of the State Bank of Vietnam shall submit to the Prime Minister for decision (in cases where the commercial bank is established by a decision of the Prime Minister) or provide comments (in cases where the commercial bank is established and operates or granted a license to establish and operate by a decision of the Governor of the State Bank of Vietnam) regarding the opening of branches or representative offices of commercial banks abroad.

Article 9.

1. Within six months from the date of receiving the State Bank of Vietnam’s approval document, the commercial bank must complete all necessary procedures in accordance with the law to put the trading office, first-level branch, representative office, and public service unit into operation, except in the case of opening a branch or representative office abroad.

2. Prior to the commencement of operations of the trading office, first-level branch, representative office, or public service unit (except in the case of opening a branch or representative office abroad), the commercial bank must register business and publish in central and local newspapers in accordance with the law; and submit to the State Bank of Vietnam (Department of Banks and Non-Bank Financial Institutions) a document confirming the lawful ownership and use of the premises of the trading office, branch, representative office, or public service unit.

SECTION III OPENING OF SECOND-LEVEL BRANCHES AND THIRD-LEVEL BRANCHES

Article 10.

1. The board of directors of a commercial bank shall specify the conditions, documents, and procedures for opening second-level branches and third-level branches in accordance with the law and decide to open such branches after obtaining written opinions from the Chairman of the People's Committee of the district, county, or town where the second-level or third-level branch is planned to be opened, and a written consensus from the Director of the Branch of the State Bank of Vietnam in the province or city where the second-level or third-level branch is intended to be opened regarding the opening of the second-level or third-level branch of the commercial bank.

2. Before the second-level or third-level branch commences operations, the commercial bank must submit the decision to open the second-level or third-level branch to the Branch of the State Bank of Vietnam in the province or city where the second-level or third-level branch is being opened.

Chapter III

DIVISION, SEPARATION, MERGER, AND CONSOLIDATION OF BRANCHES

PART I. DIVISION, SEPARATION, MERGER, AND CONSOLIDATION OF FIRST-LEVEL BRANCHES

Article 11.

A commercial bank may divide, separate, merge, or consolidate first-level branches upon written approval from the State Bank.

Article 12.

The documents submitted to the State Bank for its approval of the division, separation, merger, or consolidation of first-level branches of a commercial bank include:

1. A document from the Chairman of the Board of Directors or a person authorized to request the State Bank's approval for the division, separation, merger, or consolidation of first-level branches, which must outline the necessity of such actions and provide the name and address of the branch to be divided, separated, merged, or consolidated.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. A resolution of the Board of Directors regarding the division, separation, merger, or consolidation of first-level branches.

4. A plan for the division, separation, merger, or consolidation in accordance with the law.

5. A document from the Governor of the State Bank Branch in the province or city where the commercial bank intends to divide, separate, merge, or consolidate first-level branches concerning the division, separation, merger, or consolidation of first-level branches, except in cases where a joint-stock commercial bank divides, separates, merges, or consolidates first-level branches located in the same province or city as the headquarters of the joint-stock commercial bank.

Article 13.

The procedure and formalities for requesting the State Bank's approval for the division, separation, merger, or consolidation of first-level branches of a commercial bank:

1. A joint-stock commercial bank that divides, separates, merges, or consolidates first-level branches shall submit two sets of documents for the division, separation, merger, or consolidation of first-level branches to the State Bank Branch in the province or city where the commercial bank has its headquarters.

Within a maximum period of fifteen working days from the date of receipt of all documents, the State Bank Branch in the province or city must issue an opinion on the division, separation, merger, or consolidation of first-level branches of the joint-stock commercial bank and the documents specified in Article 12 of this Regulation and send them to the State Bank (Department of Commercial Banks and Non-Bank Credit Institutions), along with one set of documents from the joint-stock commercial bank.

2. A state-owned commercial bank that divides, separates, merges, or consolidates first-level branches shall submit one set of documents for the division, separation, merger, or consolidation of first-level branches to the State Bank (Department of Commercial Banks and Non-Bank Credit Institutions).

Within a maximum period of thirty working days from the date of receipt of all documents from the state-owned commercial bank, or fifteen working days from the date of receipt of the documents from the joint-stock commercial bank sent by the State Bank Branch in the province or city, the State Bank will review and issue a written opinion approving or not approving the division, separation, merger, or consolidation of first-level branches of the commercial bank. In case of non-approval, the State Bank will issue a document clearly stating the reasons.

Prior to the division, separation, merger, or consolidation of first-level branches, the commercial bank must re-register with the business registration authority and publish a notice according to the law.

PART II. DIVISION, SEPARATION, MERGER, AND CONSOLIDATION OF SECOND-LEVEL AND THIRD-LEVEL BRANCHES

Article 14.

The Board of Directors of a commercial bank shall establish conditions, documents, procedures, and formalities for the division, separation, merger, or consolidation of second-level and third-level branches in accordance with the law and decide on the division, separation, merger, or consolidation of second-level and third-level branches after obtaining a written agreement from the Governor of the State Bank Branch in the province or city where the second-level and third-level branches are located.

Chapter IV

TERMINATION OF OPERATIONS OF TRADING DEPARTMENTS, BRANCHES, REPRESENTATIVE OFFICES, AND ENTERPRISE UNITS

SECTION I. TERMINATION OF OPERATIONS OF TRADING DEPARTMENTS, FIRST-LEVEL BRANCHES, REPRESENTATIVE OFFICES, AND ENTERPRISE UNITS

Article 15

A commercial bank may terminate the operations of trading departments, first-level branches, representative offices, and enterprise units upon written approval from the State Bank.

Article 16.

The documents submitted to the State Bank for its approval of the termination of operations of trading departments, first-level branches, representative offices, and enterprise units of a commercial bank include:

1. A document from the Chairman of the Board of Directors or a person authorized to request the termination of operations of trading departments, first-level branches, representative offices, and enterprise units, specifying the reasons, name, and address of the trading department, first-level branch, representative office, or enterprise unit seeking to terminate operations.

2. A power of attorney document from the Chairman of the Board of Directors (for cases involving delegation).

3. A resolution of the Board of Directors regarding the termination of operations of trading departments, first-level branches, representative offices, and enterprise units.

4. A plan for handling the termination of operations of trading departments, first-level branches, representative offices, and enterprise units.

5. A document from the Governor of the State Bank Branch in the province or city where the trading department, first-level branch, or representative office planning to terminate operations is located concerning the termination of operations of the trading department, first-level branch, or representative office of the commercial bank, except in cases where a joint-stock commercial bank terminates the operations of trading departments, first-level branches, or representative offices located in the same province or city as the headquarters of the joint-stock commercial bank.

Article 17. The procedure and formalities for requesting the State Bank's approval for the termination of operations of trading departments, first-level branches, representative offices, and enterprise units of a commercial bank.

1. A joint-stock commercial bank shall submit two sets of documents for the termination of operations of trading departments, first-level branches, representative offices, and enterprise units to the State Bank Branch in the province or city where the commercial bank has its headquarters.

Within a maximum period of fifteen working days from the date of receipt of all documents, the State Bank Branch in the province or city must issue an opinion on the termination of operations of trading departments, first-level branches, representative offices, and enterprise units of the joint-stock commercial bank and the documents specified in Article 16 of this Regulation and send them to the State Bank (Department of Commercial Banks and Non-Bank Credit Institutions), along with one set of documents from the joint-stock commercial bank.

2. A state-owned commercial bank shall submit one set of documents for the termination of operations of trading departments, first-level branches, representative offices, and enterprise units to the State Bank (Department of Commercial Banks and Non-Bank Credit Institutions).

3. Within a maximum period of thirty working days from the date of receiving all documents of state commercial banks, fifteen working days from the date of receiving documents of joint-stock commercial banks sent by the State Bank Branch in the province or city, the State Bank shall examine and issue a written opinion to approve or not approve the cessation of operations of trading offices, first-level branches, representative offices, and non-business units of commercial banks. In case of disapproval, the State Bank shall issue a document specifying the reasons.

Article 18.

1. Within thirty working days from the date of receiving the approval document of the State Bank, commercial banks must cease the operations of trading offices, first-level branches, representative offices, and non-business units.

a) The name and address of the trading department, branch, representative office, or public service unit whose operations are being terminated;

a) The name and address of the trading office, first-level branch, representative office, and non-business unit whose operations are to be ceased.

b) The reason for ceasing the operations of the trading office, first-level branch, representative office, and non-business unit;

d) The responsibility of the commercial bank towards creditors.

The decision to terminate operations of trading departments, branches, representative offices, and public service units of commercial banks must be sent to the State Bank of Vietnam (Department of Banks and Non-Bank Credit Institutions; Banking Inspection Agency; State Bank of Vietnam Branch in the province or city where the commercial bank has trading departments, branches, representative offices, or public service units); relevant organizations and individuals with rights and obligations; publicly posted at the headquarters of the commercial bank and the location of the trading departments, branches, representative offices, or public service units whose operations are being terminated; and published in central and local newspapers according to the provisions of the law.

3. The decision to cease the operations of trading offices, first-level branches, representative offices, and non-business units of commercial banks must be sent to the State Bank, business registration authority, all major creditors, interested parties, and persons with rights, obligations, and interests related to the matter; publicly posted at the headquarters of the commercial bank and the premises of the trading office, first-level branch, representative office, and non-business unit whose operations are being ceased; and published in central and local newspapers in accordance with the law.

Article 19.

Commercial banks with trading offices, first-level branches, representative offices, and non-business units that have ceased operations are responsible for paying off all debts owed to creditors and resolving other outstanding matters in accordance with the law.

PART II CEASING OPERATIONS OF SECOND-LEVEL BRANCHES AND THIRD-LEVEL BRANCHES

Article 20.

The board of directors of commercial banks shall establish conditions, documents, procedures, formalities, and handling plans for ceasing operations of second-level branches and third-level branches in accordance with the law and decide on the cessation of operations of these branches after obtaining a unified written opinion from the State Bank Branch in the province or city where the second-level branch or third-level branch is located.

Chapter V

IMPLEMENTING PROVISIONS

Article 21.

Any amendments or supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank.