Quyết định 03/2007/QD-NHNN

DECISION

AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES OF THE REGULATION ON SAFETY ASSURANCE RATIOS IN ACTIVITIES OF CREDIT INSTITUTIONS PROMULGATED TOGETHER WITH THE STATE BANK GOVERNOR'S DECISION NO. 457/2005/QD-NHNN OF APRIL 19, 2005

THE SATE BANK GOVERNOR

Pursuant to December 12, 1997 Law No. 01/1997/QH10 on the State Bank of Vietnam; and June 17, 2003 Law No. 10/2003/QH11 Amending and Supplementing a Number of Articles of the Law on the State Bank of Vietnam;
Pursuant to December 12, 1997 Law No. 02/1997/QH10 on Credit Institutions; and June 15, 2004 Law No. 20/2004/QH11 Amending and Supplementing a Number of Articles of the Law on Credit Institutions;
Pursuant to the Government's Decree No. 86/2002/ND-CP of November 5, 2002, defining the functions, tasks, powers and organizational structures of ministries and ministerial-level agencies;
Pursuant to the Government's Decree No. 52/2003/ND-CP of May 19, 2003, defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;
At the proposal of the director of the Department of Banks and Non-Bank Credit Institutions,

DECIDES:

Article 1.- To amend and supplement a number of articles of the Regulation on safety assurance ratios in activities of credit institutions promulgated together with the State Bank Governor's Decision No. 457/2005/QD-NHNN of April 19, 2005, as follows:

1. To amend Clause 9 of Article 2 as follows:

"9. Foreign currency transaction contracts include foreign currency swapping contracts, foreign currency term contracts, future contracts, contracts on the option to select foreign currencies, and other foreign currency transaction contracts according to regulations of the State Bank of Vietnam."

2. To add Clauses 20 and 21 to Article 2 as follows:

"20. Capital contribution and share purchase mean that credit institutions use their charter capital and reserves to contribute to the charter capital of, or purchase shares from, other enterprises or credit institutions; to contribute to investment funds or the execution of investment projects, including entrustment of capital to other legal entities, organizations or enterprises for making investment in the above-mentioned forms.

21. Investments in the form of capital contribution or share purchase in order to hold the right to control enterprises include:

a/ Investments representing 25% or more of the charter capital of a joint stock company;

b/ Investments representing 51% or more of the charter capital of a limited liability company."

3. To amend Points 3 and 4, Clause 3 of Article 3 as follows:

"3.3. Total capital invested by credit institutions in other credit institutions in the form of capital contribution or share purchase and total investments in the form of capital contribution or share purchase for holding the right to control enterprises operating in the domain of insurance or security.

3.4. An excess of 15% of the own capital of a credit institution for the amount of capital it contributes to or uses to purchase shares from, an enterprise, investment fund or project.

An excess of 40% of the own capital of a credit institution for the total amount of capital it contributes to, or uses to purchase shares from, enterprises, investment funds or projects, excluding the above-mentioned excessive 15% already subtracted from the own capital."

4. To amend Item b, Point 1.1.4, Clause 1 of Article 5 as follows:

"b. Other unconditionally revocable commitments."

5. To annul Point b, Clause 4 of Article 6.

6. To amend Point c, Clause 4 of Article 6 as follows:

"c. Receivables from banks established in states other than OECD member states, with a residual maturity of one year or more, and receivables with a residual maturity of one year or more guaranteed by these banks."

7. To add Clause 5 to Article 6 as follows:

"5. The group of credit assets with a risk coefficient of 150% comprises:

a/ Loans for securities investment;

b/ Loans provided to securities enterprises for securities trading purposes.

c/ Loans provided to securities enterprises controlled by credit institutions.

d/ Amounts of capital contributed to, or used to purchase shares from, enterprises, investment funds or projects, except for the portion already subtracted from the own capital (if any) of credit institutions under the provisions of Point 4, Clause 3, Article 3 of this Regulation."

8. To add Points 4 and 5 to Clause 1 of Article 8 as follows:

"1.4. Credit institutions may neither grant unguaranteed credits nor grant credits with preferential conditions to enterprises which they hold the right to control, and shall comply with the following restrictions:

- The total loans and guarantees provide by a credit institution for an enterprise which the credit institution holds the right to control must not exceed 10% of the own capital of that credit institution.

- The total loans and guarantees provide by a credit institution for enterprises which it holds the right to control must not exceed 20% of its own capital.

1.5. Credit institutions may not grant credits for securities trading enterprises which they hold the right to control; and may not provide unguaranteed loans for securities investment and trading."

9. To amend Clause 1 of Article 9 as follows:

"1. Loans coming from trust investment capital sources of the Government, organizations and individuals. Financial leasing amounts coming from trust capital sources of the Government, organizations, individuals or lessees being other credit institutions."

10. To amend Clause 3 of Article 9 as follows:

"3. Loans and guarantees with a maturity of less than one year granted to other credit institutions operating in Vietnam."

11. To amend Clause 5 of Article 9 as follows:

"5. Loans and guarantees fully secured with deposits, including savings and escrow deposits, at credit institutions."

12. To amend Clause 6 of Article 9 as follows:

"6. Loans and guarantees fully secured with valuable papers issued by credit institutions themselves."

13. To amend Clause 2 of Article 12 as follows:

"2. The minimum ratio of 1 between total credit assets receivable within subsequent 7 days and total debit assets payable within subsequent 7 days."

14. To amend Article 16 as follows:

"1. Credit institutions may only use its charter capital and reserves for contribution of capital to, or purchase of shares from, enterprises, investment funds, projects or other credit institutions in accordance with the provisions of this Regulation and relevant provisions of law.

2. Capital contribution and share purchase decisions of credit institutions shall be carefully evaluated and assessed by their Executive Committees and approved by the Managing Boards."

15. To amend Article 17 as follows:

"1. The level of capital a credit institution contributes to, or uses to purchase shares from, an enterprise, investment fund, project or another credit institution must not exceed 11% of the charter capital of that enterprise, investment fund, project or credit institution.

2. The total capital a credit institution contributes to, or uses to purchase shares from, all enterprises, investment funds, projects and other credit institutions must not exceed 40% of its charter capital and reserves.

3. Credit institutions that contribute capital or purchase shares in excess of the limits set in Clauses 1 and 2 of this Article must obtain prior written approval of the State Bank, provided that such capital contribution or share purchase is reasonable and the credit institutions have observed other safety assurance ratios in banking activities, have the ratio of non-performing loans (NPL) of 3% or less."

16. To amend Article 18 as follows:

"Article 18.-

1. Credit institutions that have contributed capital to, or purchased shares from, enterprises, investment funds or projects in excess of the ratios set in Article 17 of this Regulation may not further contribute capital or purchase shares during the time they have those excessive ratios; and shall, at the same time, adjust by themselves such ratios in accordance with regulations within (2) two years from the effective date of this Regulation, except for cases approved by the State Bank.

2. Credit institutions that have provided credit for securities trading enterprises which they hold the right to control shall take measures to comply with regulations within (1) one year from the effective date of this Regulation."

17. To replace Appendices A and B to the Regulation on safety assurance ratios in activities of credit institutions promulgated together with Decision No. 457/2005/QD-NHNN with Appendices A and B to this Regulation.

Article 2.- This Decision takes effect 15 days after its publication in "CONG BAO."

Article 3.- The director of the Office, the director of the Department of Banks and Non-Bank Credit Institutions, heads of units under the State Bank, directors of Vietnam State Bank's provincial/municipal branches, chairmen of Managing Boards and general directors (directors) of credit institutions shall implement this Decision .