LEGAL UPDATE RELATING TO FINANCE AND CREDIT (MONTHLY LEGAL UPDATE – 02&03/2022)
v Name of legal document: Circular No. 25/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing a number of articles of Circular No. 01/2015/TT-NHNN dated January 6, 2015 defining trading, supply of interest rate derivative products of commercial banks, branches of foreign banks (referred respectively to as the “Circular No. 25/2021/TT-NHNN” and “Circular No. 01/2015/TT-NHNN”).v Effective date: 14/02/2022.
The content should be noted: Adding provisions on defining trading, supply of interest rate derivative products by electronic means
Specifically, Clause 4 Article 1
of Circular No. 25/2021/TT-NHNN stipulates:
“Article 1. Amending and supplementing a
number of articles of Circular No. 01/2015/TT-NHNN
...
4. Adding Article 4a as follows:
“Article 4a. Defining trading, supply of interest rate derivative
products by electronic means
1. Commercial banks, foreign bank branches defining trading and
supplying interest rate derivative products by electronic means must develop a
business process for providing interest rate derivative products by electronic
means in accordance with the provisions of this Circular, the provisions of the
law on prevention and combat of money laundering, the law on electronic
transactions and relevant legal provisions, ensuring the safety and
confidentiality of customer information and safe operation of commercial banks
and foreign bank branches.
2. Commercial banks and foreign bank branches must fully store
information related to the defining trading and supply of interest rate
derivatives by electronic means to serve the inspection, compare, settle
tracing, complaints, disputes and provide information upon request from
competent state management agencies.””
v Name of legal document: Circular No. 23/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amendments to Circular No. 52/2018/TT-NHNN dated December 31, 2018 of Governor of State Bank of Vietnam prescribing credit rating of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 23/2021/TT-NHNN” and “Circular No. 52/2018/TT-NHNN”).v Effective date: 15/02/2022.
The content should be noted: Amending and supplementing regulations on word interpretation in a number of clauses of Article 3 of Circular No. 52/2021/TTBYT-NHNN.
Specifically, Point a Clause 1 Article
1 of Circular No. 23/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular
No. 52/2018/TT-NHNN
1. Article 3 is amended as follows:
a) Clauses 1, 2, 3, 4, 5 Article 3 are amended as follows:
“1. Capital adequacy ratio means an indicator that is
calculated according to SBV’s regulations on prudential limits and ratios for
operations of credit institutions and foreign bank branches (hereinafter
referred to as “FBB”).
2. Tier 1 capital ratio means an indicator calculated according
to the following provisions:
a) If a credit institution or FBB applies the capital adequacy ratio
defined according to SBV’s regulations on prudential limits and ratios for
operations of credit institutions and FBBs (excluding the Circular No. 41/2016/TT-NHNN dated
December 30, 2016 and its amending and superseding documents (if any)), its
tier 1 capital ratio shall be calculated adopting the following formula:
|
Tier 1 capital ratio
(%) |
= |
Standalone tier 1
capital |
x |
100% |
|
Total standalone
risk-weighted assets |
b) If a credit institution or FBB applies the capital adequacy ratio
defined according to the Circular No. 41/2016/TT-NHNN , its tier 1
capital ratio shall be calculated adopting the following formula:
|
Tier 1 capital ratio (%) |
= |
Tier 1 capital |
x |
100% |
|
RWA + 12,5 x
(KOR + KMR) |
Where:
- RWA: Total credit risk-weighted assets
- KOR: Capital required for operational risks
- KMR: Capital required for market risks
Tier 1 capital, RWA, KOR, KMR shall be calculated according to the
Circular No. 41/2016/TT-NHNN .
3. Debt restructured as potentially bad debt means the
balance of debt which is not written off as bad debt at a credit institution or
FBB as it is rescheduled or its interest is exempted or reduced and
classification group to which it belongs remains unchanged.
4. Debts sold to VAMC as bad debts yet to be disposed of means
bad debts which have been purchased using special bonds by VAMC (Vietnam Asset
Management Company) and have yet to be disposed or recovered.
5. Customer with a large outstanding balance means a customer
(except credit institutions and FBBs) having the outstanding balance making up
at least 5% of the equity of a credit institution or FBB. With regard to
cooperative banks, customers with large outstanding balances include people’s
credit funds that are their members.”.”
v Name of legal document: Circular No. 26/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam guiding foreign currency trading between the State Bank of Vietnam and credit institutions permitted to engage in foreign exchange (referred to as the “Circular No. 26/2021/TT-NHNN”).v Effective date: 15/02/2022.
Some contents should be noted:
Specifically, Article 8 of
Circular No. 26/2022/TT-NHNN stipulates: “Article 8. Trading method
SBV shall perform foreign currency trade with permitted credit
institutions which have foreign currency trading connection with the SBV via:
1. Spot trade.
2. Forward trade.
3. Foreign currency swap.
4. Foreign exchange option.
5. Other trading methods decided by SBV from time to time.”
·
Secondly, stipulating on Instruments and languages of trade
Specifically, Article 8 of
Circular No. 26/2022/TT-NHNN stipulates: “Article 10. Instruments and languages of
trade
1. SBV shall trade with permitted credit institutions via online
trading systems such as Refinitiv, Bloomberg, telephones, or other instruments
decided by SBV from time to time.
2. Verified foreign currency trades on instruments under Clause 1 of
this Article means the commitment is unchanged. Revision or cancellation must
be agreed upon by both parties.
3. If foreign currency trade is performed via telephones, permitted
credit institutions must make sure that telephones can record audio, store
audio recording, and trace the agreed trade. Once the agreement is made via
telephones, on the trade date, SBV and permitted credit institutions shall
verify again via physical or electronic documents which will be signed by
competent authorities.
4. Language used in trade across foreign currency trading instruments
is Vietnamese or English.”
v Name of legal document: Circular No. 28/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amendments to Circular No. 40/2011/TT-NHNN dated December 15, 2011 of the Governor of the State bank of Vietnam on the issuance of licenses and the organization, operation of commercial banks, foreign bank branches, representative offices of foreign credit institutions, other foreign organizations having banking activities in Vietnam (referred respectively to as the “Circular No. 28/2021/TT-NHNN” and “Circular No. 40/2011/TT-NHNN”).v Effective date: 01/03/2022.
The content should be noted: Amending and supplementing regulations on principles for replacement of license and addition of activities to the license.
Specifically, Clause 2 Article 1
of Circular No. 28/2021/TT-NHNN stipulates: “Article 1. Amendments to Circular No.
40/2011/TT-NHNN
...
2. Amendments to Clause 3 Article 18a (amended by Clause 3 Article 1 of
Circular No. 17/2017/TT-NHNN dated November 20, 2017 of the Governor of
the State Bank of Vietnam on amendments to Circular No.40/2011/TT-NHNN):
“3. A commercial bank or FBB may perform the activities specified in
Clause 26 Article 4 of the form in Appendix 01a and Clause 24 Article 4 of the
form in Appendix 01b after obtaining the approval from the State Bank;
procedures for application for addition of such activities to the License shall
be carried out in accordance with specific regulations of the State Bank and
other relevant law provisions.””
v Name of legal document: Circular No. 01/2022/TT-NHNN issued on 28/01/2022 by the State Bank of Vietnam amendment to Circular No. 21/2013/TT-NHNN dated September 9, 2013 of Governor of State Bank of Vietnam on operation network of commercial banks (referred respectively to as the “Circular No. 01/2022/TT-NHNN” and “Circular No. 21/2013/TT-NHNN”).v Effective date: 15/03/2022.
The content should be noted: Amending and supplementing regulations on opening of operation of domestic branches and transaction offices.
Specifically, Clause 7 Article 1
of Circular No. 01/2022/TT-NHNN stipulates:
“Article 1. Amendments to Circular
No. 21/2013/TT-NHNN
...
7. Amendments to Article 14:
“Article 14. Opening of operation of domestic branches and transaction
offices
1. Requirements for opening of domestic branches and transaction
offices:
a) Have the right to own or legally utilize head office of the branches
and transaction offices; head office must ensure storage of instruments (except
for transaction offices), convenience and safety for transactions and assets,
be installed with security, protection systems, constant electricity and
communication supply systems satisfactory to fire safety;
b) Head office of branches where treasury is located must meet the
standards of SBV. In case a commercial bank has more than one branch in the
same province or central-affiliated city, at least one branch of the commercial
bank must have cash treasury in accordance with regulations of SBV and the
commercial bank must be responsible for transferring cash of branches without
cash treasury to the branch with cash treasury at the end of each working day;
c) Branches and transaction offices must be equipped with information
technology system that is connected to the head office while transaction
offices must be connected to supervisory branches; maintain continuous operations
of information technology systems and databases in order to ensure safety and
security for professional operations;
d) Branches and transaction offices have the required managerial staff
including branch directors, vice directors, directors of transaction offices or
equivalent titles and professional employees;
dd) Branch directors or equivalent titles (for cases of branch opening)
must meet all standards and requirements under Clause 5 Article 50 of the Law
on Credit Institutions.
2. Commercial banks shall submit reports on satisfaction of
requirements for opening domestic branches and transaction offices to SBV
braches where the domestic branches and transaction offices are located at
least 15 days prior to the opening day.
3. Commercial banks shall carry out the opening for domestic branches
and transaction offices after meeting requirements under Clause 1 of this
Article and completing procedures for registering branch operation (when
opening branches) or issuing notice on business facilities (when opening
transaction offices) as per the law.
4. Within 7 working days prior to the expected opening day of domestic
branches or transaction offices mentioned under this Article, commercial banks
must announce on website of SBV and the commercial banks, a printed daily
newspaper in 3 consecutive issues or online newspapers in Vietnam.””
v Name of legal document: Decision No. 177/QD-NHNN issued on 21/02/2022 by the State Bank of Vietnam on the announcement of administrative procedures are amended, supplemented, replaced, and abolished in the field of banking establishment and operations performed at the Single Window Department under the management function of the State Bank of Vietnam (referred to as the “Decision No. 177/QD-NHNN”).v Effective date: 15/03/2022.
The content should be noted: Abolishing
the procedure of approving the change of the name of a domestic branch of a
commercial bank and the procedure of approving the eligibility to open a
domestic branch or transaction office of a commercial bank within the scope of
management function of the State Bank of Vietnam.
Specifically, Item 3 Part 1 of Decision
No. 177/QD-NHNN stipulates: “PART I. LIST OF ADMINISTRATION PROCEDURES
3. Lis of administration procedures
abolished within the scope of management function of the State Bank of Vietnam
|
NO |
Case
number of administrative procedure |
Name
of administrative procedure |
Name
of the legal document providing for the abolition of administrative
procedures |
Field |
Implementing
agency |
|
1 |
2.000123 |
Procedure of approving
the change of the name of a domestic branch of a commercial bank |
Circular No. 01/2022/TT-NHNN |
Banking establishment and operation |
State Bank branches in provinces and cities |
|
2 |
1.000372 |
Procedure of approving the eligibility to open a domestic branch or
transaction office of a commercial bank |
Circular No. 01/2022/TT-NHNN |
Banking establishment and operation |
State Bank branches in provinces and cities |
”
v Name of legal document: Circular No. 24/2021/TT-NHNN issued on 31/12/2021 by the State Bank of Vietnam amending and supplementing to some articles of Circular No. 39/2011/TT-NHNN December 15, 2011 of the Governor of the State bank of Vietnam providing independent audit of credit institutions and foreign bank branches (referred respectively to as the “Circular No. 24/2021/TT-NHNN” and “Circular No. 39/2011/TT-NHNN”).v Effective date: 15/04/2022.
The content should be noted: Amending and supplementing regulations on contents with at least in independent audit of operations of the internal control system of credit institutions and foreign bank branches.
Specifically, Clause 2 Article 1
of Circular No. 24/2021/TT-NHNN stipulates:
“Article 1. Amending and supplementing a
number of articles of Circular No. 39/2011/TT-NHNN
...
2. Amending and supplementing Clause 2, Article 8 as follows:
“2. Independently audit the operation of the internal control system of
a credit institution or foreign bank branch with at least the following
contents:
a) Auditing the internal control system of credit institutions, foreign
bank branches (including internal mechanisms, policies, processes and
regulations) in compliance with current law provisions and regulations of the
State Bank on the internal control system of credit institutions and foreign
bank branches.
For the contents of the internal control system that have been audited
for compliance without any change, such content is not required to be
re-audited;
b) Auditing the operation of the internal control system for the
preparation and presentation of financial statements;
c) In addition to the audit contents specified at Points a and b of
this Clause, the commercial bank or foreign bank branch must audit the
operation of the internal control system for the content of the internal
assessment on the sufficient capital level of commercial banks and foreign bank
branches in accordance with the State Bank's regulations on internal control
system.””
