Circular 40/2011/TT-NHNN, announced by the central bank last week
provides that banks must have profited during the past five consecutive
years before applying for operating licence.
Under old regulations, foreign banks were required to have 50
trillion VND (2.38 billion USD) in total assets and profited in the last
three consecutive years only.
The new circular also regulates that banks must not be founder
shareholders, strategic shareholders or founders of any Vietnamese
credit institutions or local banks.
Specifically, regulations on the issue of bad debt under the old
circular will be replaced by new requirements in terms of risk
management and provision while bank names and headquarters also come
under scrutiny.
The central bank said the new circular will help restrain unhealthy
competition amongst banks on the domestic market and ensure that foreign
banks have sufficient financial capabilities.
The issue of the new circular aimed at satisfying the banking
system's administrative reform while enhancing the State role in
managing foreign banking operations in Vietnam .
The circular will come into effect at the beginning of February next year.
by TTO News