On October 31, 2023, the Governor of the State Bank of Vietnam issued Circular No. 13/2023/TT-NHNN amending and supplementing certain provisions of Circulars regulating the issuance of licenses, organization, operations, and documentation, procedures, and approval processes for certain changes of commercial banks and branches of foreign banks ("Circular 13"). Circular 13 added several provisions related to non-banking enterprises participating in the capital contribution of joint-venture banks in Vietnam.
1. Non-banking enterprises allowed to contribute capital to joint-venture banks in Vietnam
Under the previous regulations in Circular 40/2011/TT-NHNN, joint-venture banks could receive capital contributions from two parties: the Vietnamese side, consisting of one or more Vietnamese banks, and the foreign side, consisting of one or more foreign banks.
Amending this regulation, Circular 13 permits non-banking enterprises to purchase/accept the transfer of capital contributions in joint-venture banks in Vietnam, with a maximum limit of one enterprise for each party.
2. Clarification of conditions for new partners that are non-banking enterprises when acquiring capital contributions in joint-venture banks
Circular 13 establishes conditions for non-banking enterprises when acquiring/transferring capital contributions in joint-venture banks, as follows:
- Legally established under Vietnamese or foreign laws[1];
- Minimum owner's equity of VND 1,000 billion, total assets of at least VND 2,000 billion for three consecutive years preceding the year of applying for approval of the sale, transfer of capital contributions for contributions ranging from over 1% to less than 5% of the charter capital of the joint-venture bank or minimum owner's equity of VND 200 billion, total assets of at least VND 400 billion for three consecutive years preceding the year of applying for approval of the sale, transfer of capital contributions for contributions of 1% or less of the charter capital of the joint-venture bank;
- For enterprises operating in industries requiring statutory capital, the owner's equity must ensure at least the committed capital contribution excluding statutory capital, based on figures from independently audited financial reports with no adverse opinion from the auditing unit for the consecutive year applying for approval of the sale, transfer of capital contributions;
- Profitable for three consecutive years preceding the year of applying for approval of the sale, and transfer of capital contributions;
- Not using mobilized capital, borrowed capital from other organizations, or individuals to contribute capital;
- Fulfilling all tax and social insurance obligations as prescribed until the submission of the application for approval of the sale, and transfer of capital contributions;
- Not being a founding shareholder, owner, founding member, or strategic shareholder of another credit institution established and operating in Vietnam.
Circular 13 takes effect from December 14, 2023.
[1] In the case of a state-owned enterprise, it must be granted written approval by the competent authority to participate in the capital contribution of a joint-venture bank by the law;
In the case of an enterprise licensed to operate in the banking, securities, and insurance sectors, it must comply with capital contribution regulations related to the relevant laws.
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