Thông tư 08/2010/TT-NHNN

CIRCULAR

PROVIDING FOR SPECIAL CONTROL OVER CREDIT INSTITUTIONS

Pursuant to the Law on State Bank of Vietnam in 1997 and the Law on amendment, supplement of several Articles of the Law on State Bank of Vietnam in 2003;
Pursuant to the Law on Credit Institutions in 1997 and the Law on amendment, supplement of several Articles of the Law on Credit Institutions in 2004;
Pursuant to the Decree No. 96/2008/ND-CP dated 26/08/2008 of the Government providing for functions, duties, authorities and organizational structure of the State Bank of Vietnam;
The State Bank of Vietnam hereby provides for special control over credit institutions as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Governing scope

This Circular provides for special control over credit institutions, which are established and operate in accordance with the Law on credit institutions, including:

- State-owned Credit Institutions;

- Joint-stock Credit Institutions;

- Joint-venture Credit Institutions;

- 100% foreign-owned Credit institutions.

Article 2. Subjects of application

1. Credit institutions provided for in Article 1 of this Circular.

2. Organizations, individuals that are related to special control over credit institutions.

Article 3. Interpretation

In this Circular, following terms shall be construed as follows:

1. “Special control” means a credit institution is put into the direct control of the State Bank of Vietnam (herein after referred to as the State Bank) due to the risk of default or risk of insolvency.

2. “Special Controllers Committee” means an organization comprising members, established in accordance with the Decision of the State Bank's Governor (herein after referred to as the Governor) to directly control credit institutions which are put into special control.

3. “Special loan” means a loan provided by the State Bank or another credit institution or Deposit Insurance of Vietnam to a credit institution which is put into special control in urgent case in order to ensure the ability of payment to its customers. Special loan shall be paid prior to any other loans of the credit institution.

4. “Special control term” means the period of time since the issuance of decision on putting a credit institution into special control until the availability of the decision on stopping special control over such credit institution.

5. “Representative of credit institution” means a member of the credit institution which is put into special control or an officer of the State Bank assigned by the Governor, on behalf of credit institution, to administrate, control, manage the credit institution in case of the vacancies for member of the Board of Directors, member of Controllers Committee, General Director (Director).

6. “Plan of strengthening organization and operation” means the plan of strengthening organization and operation of credit institution which is put into special control.

Article 4. Authority of the Governor

1. To make decision on special control, term of special control, extension of special control term, termination of special control term for credit institutions.

2. To make decision on the establishment of the Special Controllers Committee and assign officers to participate in Special Controllers Committee as provided for in this Circular.

3. To assign other credit institution to participate in the special control over credit institution, which is put into special control and at the same time to assign an officer of such credit institution to take part in Special Controllers Committee.

4. To assign a representative for the credit institution to participate in the administration, control, management of credit institution in case provided for in Paragraph 9, Article 3 of this Circular.

5. To make decision on provision of special loan by the State Bank to credit institution as provided for in Paragraph 7, Article 3 of this Circular.

Article 5. Principles of preparing file

1. File must be prepared in Vietnamese. Copies in Vietnamese and translation versions from English into Vietnamese must be certificated by competent agencies in accordance with provisions of applicable laws.

2. Application for related issues in this Circular by credit institution shall be signed by the Chairman of the Board of Directors (in case of vacancy of Chairman, by one of the members of the Board of Directors, Controllers Committee, or General Director) or representative of credit institution as provided for in Paragraph 9, Article 3 of this Circular. Person who signs such application shall be responsible for the accuracy, honesty of the file within his/her competence.

3. Files shall be sent to State Bank, State Bank branches in provinces, cities where head offices of credit institutions that are put into special control are located (hereinafter referred to as State Bank branches) in one of following ways: directly, by post; via fax or email (with confirmation by phone), then send the original files to the State Bank for examination and storage.

Chapter II

SPECIFIC PROVISIONS

SECTION 1: SPECIAL CONTROL

Article 6. Conditions to put a credit institution into special control

A credit institution may be put into special control when it gets involved in one of or following cases:

1. It runs the risk of default that is shown as follows: 03 (three) consecutive times of failure to ensure the minimum ratio of the total current assets, which can be payable within the next 7 working days to the total current liabilities, which must be payable within the next 7 working days to be 1, with regards to each currency, gold.

2. Irrecoverable debts are in danger of default, that is shown as follows: bad debts account for 10% and above in comparison with the total loans outstanding or account for 100% or above of total own capital within 3 consecutive months.

3. The accumulative loss of the credit institution is greater than 50% the total of actual charter capital and funds.

Article 7. Special supervision over credit institution

1. During the process of management, inspection, examination and supervision over the operation or through report of credit institutions, if seeing that credit institution is likely to be put into special control or seriously violates provisions of applicable laws on banking operation or other cases resulting in the unsafe, instable operation of the credit institution, the Governor may apply measures of special supervision to such credit institution.

2. The State Bank may apply the following measures of special supervision:

a. To assign the State Bank’s staff to directly come to the credit institution to supervise its daily operation.

b. To direct the credit institution to implement measures in line with provisions of applicable law in order to overcome the weakness, unsafeness or instability of credit institution.

c. To require credit institution to make periodic or unexpected report on the implementation of contents directed by the State Bank.

3. The Governor shall make decision on the deadline to terminate the application of special supervision measures.

Article 8. Decision on special control

1. The Governor shall consider, decide to put a credit institution into special control when such credit institution shows one of the indications as stated in Article 6 of this Circular.

2. Decision on putting a credit institution into special control shall include following contents:

a. Name of the credit institution which is under special control;

b. Reason for special control;

c. Full name, specific duty of members of the Special Controllers Committee;

d. Term of special control.

3. The decision on special control shall be informed to credit institution which is to be put into special control, State Bank branch, Deposit Insurance of Vietnam and other specific cases stipulated by the Governor.

4. Do not publicly announce the Decision on putting credit institution into special control, except for case as stated in Paragraph 3 of this Article.

Article 9. Plan of strengthening organization and operation

The plan of strengthening organization and operation shall include at least following contents:

1. Name, address, website of credit institution;

2. Name, address, telephone number of member of Board of Directors, member of Controllers Committee, General Director (Director) of credit institution or representative of credit institution;

3. Summary of the actual organization and operation situation of credit institution;

4. Reasons for which credit institution is put into special control;

5. Measures to overcome the special control situation and plan for implementation of such measures.

Article 10. Responsibilities, authorities of credit institution to be put into special control

1. In case of belonging to one of the cases stated in Article 6 of this Circular, credit institution shall be required to make a written report to the State Bank, through Banking Inspection and Supervision Agency of the State Bank (herein after referred to as Inspection and Supervision Agency). The report shall clearly state the actual financial situation, reason and measure already applied or to be applied to overcome.

2. To set up an accurate, sufficient, updated information channel to ensure the thorough operation of the Special Controllers Committee during the term of special control over credit institution.

3. The Board of Directors, Controllers Committee, General Director (Director) of credit institution being put into special control or representative of such credit institution as provided for in Paragraph 9, Article 3 of this Circular, shall be responsible:

a. To set up a Plan of strengthening organization and operation and submit to the Special Controllers Committee for ratification; to implement the Plan of strengthening organization and operation ratified by the Governor.

b. To continue to administrate, control, manage operation and ensure assets safety of credit institution in accordance with provisions of applicable laws, of the State Bank, except for the case where the right of administration, control and management towards the credit institution is suspended temporarily.

c. To work regularly at credit institution to implement the Plan of strengthening organization and operation.

d. To be responsible for issues related to the organization and operation of the credit institution before, during and after the period of special control.

dd. To seriously comply with requirements of the Special Controllers Committee which are in relation with the organization, administration, control and management of the credit institution.

e. To make report on the deployment and result of the implementation of special control measures as required by the Special Controllers Committee.

g. To save the cost in order to limit the financial loss.

h. To arrange place, means of working for the Special Controllers Committee.

4. During the term of special control, without the approval from the State Bank yet, it is strictly prohibited for the credit institution to:

a. Allow the Chairman and members of the Board of Directors, the Chief and members of Controllers Committee, General Director (Director) to transfer shares (in respect of joint-stock credit institutions).

b. Distribute dividends (if any).

c. Conceal, disperse and hide, mortgage, pledge, transfer or perform any transaction in relation with relevant assets, documents and files.

d. Refuse or reduce the rights, obligations and responsibilities to customers.

SECTION 2: SPECIAL CONTROLLERS COMMITTEE

Article 11. Organizational structure of Special Controllers Committee

1. Special Controllers Committee must contain at least 03 members, among which, 01 member shall be the Committee’s Chief.

2. Members of Special Controllers Committee shall be officers of related units of the State Bank, State Bank branches, or officers of other credit institution assigned by the Governor.

Article 12. Organizational mechanism of Special Controllers Committee

1. Members of Special Controllers Committee shall work at credit institution under special control in accordance with the plurality mechanism.

2. Special Controllers Committee shall use the seal of State Bank branch (for joint-stock credit institution) or of State Bank (for state-owned credit institution, joint venture credit institution, 100% foreign owned credit institution) in documents, reports signed by the Chief of Committee.

3. Special Controllers Committee shall terminate its duties upon the availability of the decision by the Governor to terminate the special control over the credit institution.

Article 13. Standards, conditions of a member of the Special Controllers Committee

1. To be an officer of the State Bank, State Bank branch and other credit institution (if required).

2. To possess a University or above University degree, specialized in economics, law area or professional aspect that he shall undertake during the implementation of special control at credit institution.

3. To have been working in the banking area for at least 03 years.

4. Not to be a related person of member of the Board of Directors, member of Controllers Committee, General Director of the credit institution which is put into special control.

5. Besides provisions stated in Paragraphs 1, 2, 3, and 4 above, the Chief of Special Controllers Committee must be a leader of department level or above of professional departments, bureaus of the State Bank or a leader of State Bank branch.

Article 14. Responsibilities, authorities of Special Controllers Committee

1. Responsibilities, authorities of Special Controllers Committee:

a. Responsibilities

(i) To take responsibility to the law, the Governor for its decisions in the implementation of special control over the credit institution;

(ii) After a maximum period of 30 days since the Governor signs the Decision as provided for in Article 8 of this Circular, Special Controllers Committee shall instruct the Board of Directors, Controllers Committee, General Director (Director) or representative of credit institution in accordance with provisions in Paragraph 9, Article 3 of this Circular to set up a Plan of strengthening organization and operation, ratify and submit to the Governor for approval to this Plan;

(iii) To instruct, supervise credit institution which is put into special control in deployment of measures stated in Plan of strengthening organization and operation;

(iv) On a monthly basis, to make report, assessment of the implementation result of the Plan of strengthening organization and operation and send to the State Bank (through Inspection and Supervision Agency), State Bank branch;

(v) To report to State Bank on unusual changes of credit institution which is put into special control, inappropriate activities during the implementation of the approved Plan of strengthening organization and operation.

(vi) To keep secret of the actual situation of the credit institution under special control; only provide information related to such credit institution upon written request by competent agency.

b. Authorities:

(i) To request the credit institution which is under special control to make report, provide documents, information related to its organization and operation to Special Controllers Committee;

(ii) To request the credit institution which is under special control to make inventory of all current assets or perform the independent audit to assess the actual financial situation of credit institution at the time it is put into special control;

(iii) To request the credit institution which is under special control to invite borrowers and creditors to come for public conciliation in order to determine the ability of debt recovery and debt payment;

(iv) To draw up a file requesting law agencies to deal with those who commit violation act in respect of law or intentionally fail to make debt payment to the credit institution.

(v) To suspend activities which are not correspondent with the Plan of strengthening organization and operation, not in line with provisions on prudential ratios in baking activity during the term of special control and immediately report to the Governor about this decision.

(vi) To temporarily suspend the right of the Chairman and members of the Board of Directors, Chief and members of Controllers Committee, General Director (Director), Deputy General Director (Deputy Director) to administrate, control and manage the credit institution if it is deemed to be necessary and immediately report to the Governor about this decision.

(vii) To request the Governor to suspend the right of the Chairman and members of the Board of Directors, Chief and members of the Controllers Committee, General Director (Director) to administrate, control and manage the credit institution.

(viii) To request the Board of Directors, General Directors (Directors) to dismiss, immediately suspend those, who commit violation acts in respect of law, fail to comply with the Plan of strengthening organization and operation, from work during the term of special control.

(ix) To propose the Governor to extend or terminate term of special control over the credit institution.

(x) To propose the Governor for the special loan to credit institution.

(xi) To propose the Governor for settlement measures for credit institution which is put into special control in accordance with provisions of current law.

(xii) To request the Governor to make decision on arising issues which are not stated in the Plan of strengthening organization and operation during the special control term.

2. For the Chief of Special Controllers Committee:

a) To assign duties to members of the Special Controllers Committee within the scope of stipulated duties and authorities;

b) To be responsible for settlement of issues related to the special control process;

c) To be responsible to the Governor for the management of the Special Controllers Committee and decisions related to the special control over the credit institution.

3. For members of Special Controllers Committee:

Members of the Special Controllers Committee shall be responsible for performing the duties assigned by the Chief and be responsible to the Chief for the implementation of their duties.

SECTION 3: TERM OF SPECIAL CONTROL, EXTENSION OF SPECIAL CONTROL TERM, TERMINATION OF SPECIAL CONTROL

Article 15. Term of special control, extension of special control term

1. The maximum term of special control is 02 years since the effective date of the Decision, by the Governor, on putting credit institution into special control.

2. In case of requesting the Governor for extension of term of special control over credit institution in accordance with provisions in Item (ix), Point b, Paragraph 1, Article 14 of this Circular, Special Controllers Committee shall submit a Statement to the Governor to request for extension of term of special control over the credit institution or refusal to such extension (the reason thereof shall be clearly stated).

3. Within the maximum period of 15 working days since the receipt of the request of Special Controllers Committee, the Inspection and Supervision Agency shall collect opinions from related units, summarize and submit to the Governor for his decision on extension or refusal to extension of special control term over the credit institution (reason thereof shall be clearly stated).

Article 16. Termination of special control

1. The Governor shall decide to terminate the special control over the credit institution upon one of following cases:

a) Where the term of special control expires, and the extension is not approved.

b) Where credit institution has overcome reasons for being put into special control and continue its normal operation.

c) Credit institution is not capable of overcoming reasons for being put into special control, resulting in its bankruptcy.

d) Before term of special control expires, the credit institution carried out reorganization in accordance with related provisions of current laws.

2. In case of requesting the Governor to terminate the special control over the credit institution in accordance with provisions in item (ix), point b Paragraph 1, Article 14 of this Circular, Special Controllers Committee must submit a Statement to the Governor for the termination of special control over the credit institution.

3. Within the maximum period of 30 working days since the receipt of the request from Special Controllers Committee as stated in Paragraph 2 of this Article, Inspection and Supervision Agency shall collect opinions from related units, then summarize and submit to the Governor for his decision on termination of the special control over credit institution.

Chapter III

RESPONSIBILITIES OF UNITS OF THE STATE BANK

Article 17. Inspection and Supervision Agency

1. To examine, detect and timely make report to the Governor when the credit institution is likely to get involved in one of the cases stated in Article 6 of this Circular.

2. To assign staff to participate in the Special Controllers Committee as requested by the Governor.

3. To act as a coordinator to receive reports and requests from credit institutions, from the State Bank branches, Special Controllers Committee, to collect opinion from related units, then summarize and submit to the Governor for his decision on issues related to special control over credit institutions as provided for in this Circular.

4. To take responsibility for management and storage of file under a Secret Regime in relation with special control over the credit institution.

Article 18. Legislation Department

1. To assign officers to participate in Special Controllers Committee as requested by the Governor.

2. Within a maximum period of 15 working days since the availability of the written request from Inspection and Supervision Agency, the Legislation Department shall give out its written opinion about legal issues during the special control over credit institution and send to the Inspection and Supervision Agency.

Article 19. Finance – Accountant Department

Within a maximum period of 15 working days since the availability of the written request from Inspection and Supervision Agency, the Finance – Accountant Department shall give out its written opinion about issues related to accounting mechanism and refund of special loan to credit institution which is under special control.

Article 20. Related units of the State Bank

Related units of the State Bank shall participate in the Special Controllers Committee and deal with related issues upon request by the Governor.

Article 21. State Bank branches

1. To examine, detect and timely make report to the Governor when credit institution is likely to get involved in one of the cases stated in Article 6 of this Circular.

2. To suggest the settlement of issues related to the special control, extension of term of special control, termination of special control over the credit institution upon request by the credit institution and Special Controllers Committee in accordance with provisions in this Circular.

3. To assign officer to participate in the Special Controllers Committee as requested by the Governor.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 22. Implementing effectiveness

1. This Circular shall be effective since 06/5/2010.

2. The Decision No. 215/1998/QD-NHNN dated 23/6/1998 on the promulgation of Regulations on special control over Vietnam joint stock credit institutions, Decision No. 1071/2002/QD-NHNN dated 2/10/2002 on the amendment, supplement of several articles, paragraphs of the Regulations on special control over Vietnam joint stock credit institutions issued in conjunction with the Decision No. 215/1998/QD-NHNN dated 23/6/1998, Decision No. 646/2002/QD-NHNN dated 21/6/2002 on the amendment of Article 14 of the Decision No. 215/1998/QD-NHNN dated 23/6/1998 of the Governor shall cease their effectiveness.

Article 23. Implementation organization

The Director of Administrative Department, Chief of Banking Inspection and Supervision Agency, Head of units of State Bank of Vietnam, Managers of State Bank branches in provinces, cities, Chairman and members of the Board of Directors, Chief and members of Controllers Committee, General Director of credit institutions shall take responsibility for implementation of this Circular.