Banking & Finance

The banking and financial system in Vietnam is made of various credit and financial institutions, including bank, non-bank credit institutions, microfinance institutions and people’s credit funds. Non-banking credit institutions include finance companies, finance-leasing companies and other non-banking credit institutions. The scope and contents of permitted activities of each credit institution are subject to the form of credit institution and specified in the license granted to it.

Banking activity in Vietnam is governed by the Law on the State Bank of Vietnam and the Law on Credit Institutions both passed on 16 June 2010, as well as a number of implementing decrees, circulars and decisions issued by the Government, the State Bank of Vietnam (“SBV”) and the Ministry of Finance.

Management Forms of Credit Institutions

Banks established in Vietnam must operate under one of the following permitted forms:

  • State-owned commercial bank established and organized in the form of a one member LLC where 100% of the charter capital is owned by the State;
  • Joint stock commercial bank;
  • Joint venture commercial bank established and organized in the form of an LLC; and
  • Entirely foreign-owned commercial bank established and organized in the form of an LLC.

Restrictions on Foreign Ownership

The acquisition by foreign entities of a shareholding in a Vietnamese commercial joint stock bank is subject to significant restrictions. All such acquisitions must be approved in writing by the SBV.

As a rule, the total shareholding of any foreign organization must not exceed 15%, and the shareholding of any foreign individual may not exceed 5% of the charter capital of a Vietnamese bank. However, the law does permit a foreign “strategic investor” and its affiliated persons to acquire up to 20% of the charter capital of a Vietnamese bank. The total aggregate shareholding of foreign investors in a Vietnamese bank may not exceed 30% of its charter capital (exceptions may be given by the Prime Minister to weak credit institutions for restructuring purposes on a case by case basis).

Entirely foreign-invested banks, in which one of the foreign shareholders is a parent bank holding a majority equity interest, may be established in Vietnam. The parent bank must have total assets of more than USD20 billion at the end of the year prior to application. Entirely foreign-owned banks must comply with Vietnamese prudential requirements on a stand-alone basis.

Foreign banks may also open branches as subsidiary units with no separate legal status. The parent bank must have total assets of more than USD20 billion at the end of the year prior to application. A foreign bank branch may not open transaction points at locations other than its registered branch office.

Representative offices of foreign banks are prohibited from conducting commercial operations in Vietnam. Its activity is generally limited to market research and the promotion and follow-up of the offshore parent entity’s activities involving Vietnamese credit institutions or companies.

The total shareholding level of foreign investors at a Vietnamese non-banking credit institution must comply with legislation applicable to public companies and listing companies.

Related Chapters

Introduction to Vietnam

Culture and religion in Vietnam

Economy of Vietnam

The Government

Judiciary

Legal System

Regulatory Framework

Capital Markets

Land & Housing

Labour Law

Taxes

Intellectual Property

Selected Sector Regulations

Dispute Resolution



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