REGULATIONS OF

BANKS IN
VIETNAM
 Historical development of the Banking System in Vietnam.

Before the August 1986 to

1945 - 1954 1955 -1975 1976 - 1985
Revolution in 1945 present

- The establishment of - The Vietnam National - During 1981 – 1985, - The National Assembly
- Was founded and
the Vietnam National Bank was renamed the production and approved the Law of the
protected by the
Bank – Bank of the State Bank of Vietnam commerce faced State Bank of Vietnam and
French colonialists
first people’s (SBV) many difficulties. the Law on Credit
through the Indo
democratic state in Institutions
China bank. - Vietnam Construction - Implemented
Southeast Asia Bank and Vietnam "positive credit - SBV participated in
- ...
Bank for Foreign Trade policies, taking credit World Trade Organization
- ...
were also established. negotiations ...
as the battle front"

--- Some of the featured activities ---

 Historical development of the central bank in Vietnam

  
 21/01/1960
 1975 - 1985
 1986 - 1990

May 6, 1951 1976 April 1, 1978 1991 - now
 Central bank
- A monopolized and often nationalized
institution given privileged control over the
production and distribution of money and
credit.

💼
- In modern economies, the central bank is
usually responsible for the formulation of
monetary policy and the regulation of member
banks.
State bank of
Definition
Vietnam

The Vietnam National

💼 Bank was officially
established in May 6,
1951.
 Functions of central bank
Supervise all commercial
Promote Be in charge of other
banks’ activities in
monetary stability Issue government roles in monetary
Vietnam. Lend the state
and formulate bonds, organise management and foreign
money to the
monetary policies. bond auctions. exchange rates
commercial banks.
Control inflation: the
Print and central bank buys
Promote 7 8 government bonds of
issue
institutions’ bills to increase inflation
1 banknotes.
stability and 6 9 and sell them to reduce
supervise inflation.
financial
institutions. 2 5 Manage the country’s 10 •The central bank acts as
international “the lender of last resort”
3 4 reserves. 11 which means it is
responsible for providing its
Provide banking facilities Provide banking economy with funds when
and recommend economic facilities for the commercial banks cannot
policies to the government. financial cover a supply shortage
institutions.
5
A commercial bank is a type of
financial institution that accepts
deposits, offers checking account
services, makes business, personal
and mortgage loans, and offers basic
financial products like certificates of

deposit (CDs) and savings accounts
to individuals and small businesses. Commercial Banks

A commercial bank is
where most people do
their banking, as
opposed to an
investment bank.
How Commercial Banks make money

providing loans and

🔄
earning interest income

📈 interest rate

net interest income ✓

commercial bank
📑 deposits

fees for mortgages and

other banking services ⌂
7
Commercial Banks Evolution

teller window
“virtual” investment
1 services, ATMs and 2 3
transactions banking divisions
safe deposit boxes

8
The Role of Commercial Banks in the Economy

Daily interact with Capital allocation

commercial banks for profit

Provide good service

An investment to its customers and
arm good returns to its
investors

9
SYSTEM OF CREDIT INSTITUTIONS
 State-owned Commercial Banks
Commercial
Banks  Joint-stock Commercial Banks
Banks –
central  Wholly Foreign Owned Banks
bank
Policies  Joint Venture Banks
Banks

SYSTEM OF Foreign
CREDIT Bank
INSTITUTIONS B ranches Cooperate
Banks

...
 THE NUMBER OF EACH TYPE OF BANKS
2 1 4
2
5

TOTAL: 94 49

31

Foreign Bank Branches

Joint Stock Commercial banks
Wholly Foreign Owned Banks
Joint Venture Banks
Policies Banks
 🔑
Bank regulation related to bank’s establishment
 ASSUMPTION

Current regulations are not

Following regulation and permanent and are likely to
legislation, banking system 👍 2 1 👍 have extension with more
is enhanced terms and close control.

👍
Bankruption and
systemic failure would
not occur

13
Basic documents required for all commercial bank applications for licensing

📋 💨
Internal
An 💨 rules
A proposed
analysis of
Informationon
theorganization
business plan and
market
technology and
for the
the
A operations
draft charter
Risk management policies
three years
bank’s infrastructurelicensing
following
ability to compete

14
Conditions for licensing a shareholding commercial bank

Must be entities, they must be correctly licensed, and if they

1
are individuals, they must have full capacity for civil acts

The investors must have sufficient financial capacity to

2
participate in capital contributions.

There must be at least two founding shareholders which are

3
organizations.

15
 Condition for licensing for establishment
of a joint venture bank or a bank with 100% foreign owned capital

Must
Must
A have
have
founding
The minimum
been
shareholder
banking total
profitable
authority mustassets
forthe
in have equal
thecountry
five towhere
at least
consecutive
international USD
years10prior
operational
the foreign billion
to at
thethe
experience,
credit end
year inof
and
institution the
which
ismust
year
the
be immediately
application
Provide
classified filepreceding
a written ismust
submitted,
commitment
by international
headquartered the year
and
anto
signcredit in which
must
ensure
rating
agreement that the
maintain application
thethe
institutions
with this
bank’s
as
SBV charter
stable
on file
profitability
or forthrough
licensing
capital
better,
inspection is
the
will able
and be
4
1
23
5
submitted.
supervisionmaintained
to operate
of banking date on than
atoperations,
nonormally
less which the
the
even
and on inlicense
levelan of
exchange is issued.
the
economic correct legal capital.
downturn.
of information about banking
security.

16
Conditions to obtain a license - Charter Capital

✓ ✓ ✓

Having a minimum
charter capital Charter capital is Each commercial
equal to the legal contributed by bank has different
capital level Vietnam dong. the legal capital
prescribed by law level.
at the time of its
establishment.

17
✎ A analysic for a Charter
capital of Joint stock bank
Having a minimum charter capital equal to the legal capital level
prescribed by law at the time of its establishment

Owners' capital Mobilized capital

2 3

Operational
capital of Credit 1 Capital 4 Other capital
Institutions (CI)

19
 Charter capital or Allocated capital

Differences due to revaluation of assets,

exchange rate differences

Surplus equity
Owner's Reserve fund for supplementing charter capital,
capital development investment fund, financial reserve
fund

Unrealized accumulated profits, accumulated

losses not yet dealt

Other capital owned by CIs, branches of foreign

banks
Mobilized capital of organizations and
individuals

Capital mobilized through the

issuance of valuable papers
Mobilized
Entrusted investment capital
Loans to domestic and foreign
financial institutions and financial
institutions

Borrowed from SBV

 LEGAL CAPITAL OF CREDIT INSTITUTIONS
(Promulgated together with the Government's Decree
No. 10/2011 / ND-CP of January 26, 2011)
3500
3000 3000 3000 3000
3000
2500
Billion VNDs

2000
1500
1000
500 345

0
State Joint-stock Joint-venture 100% Foreign Branches of
commercial commercial bank capital bank Foreign bank
bank bank
The legal capital will be applied until 2011
Banks are not allowed to use their charter capital and funds to
buy shares or contribute capital to shareholders of the Bank.

💡 1 The State holds 100% of charter capital and State-owned CIs.

CIs may only use charter capital and reserve funds to contribute
capital and purchase shares of enterprises or other credit institutions
2 💡
Credit institutions with 100% charter capital and state-owned credit
💡 3 institutions must comply with the law on management and use of state
capital invested in production and business at enterprises.

💡
In order to ensure capital adequacy, the Decree stipulates that CIs and
4
branches of foreign banks are responsible for managing and using capital
and assets, distributing profits, implementing financial management regimes

💡 5
The regulations on assurance of safety in operation comply with the
provisions of the Law on Credit Institutions and other relevant law provisions.
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