Công văn 918/NHNN-TTGSNH

State Bank (SBV) is now considering the amendment of regulation on operation network of commercial banks issued in conjunction with the Decision No.13/2008/QD-NHNN dated 29/4/2008 (the Decision No.13). During the time when this regulation has not been issued yet, in order to make sure that the expansion of commercial banks network is performed efficiently and in line with the banks’ administration capacity and in line with current social economic situation, the Governor of the State Bank hereby provides guidance on the opening of transaction departments, branches and transaction offices by commercial banks in the year of 2010 as follows:

I- For the opening of a transaction department and a branch:

1. Conditions, procedures and documents for opening a transaction department:

A commercial bank shall be authorized to open a transaction department if it can fully meet the conditions, procedures and documents provided for in the Decision No.13.

2. Conditions, procedures and documents for opening a branch:    

2.1-A commercial bank shall be authorized to open a branch if it can meet the following requirements:

a- Procedures, documents

In accordance with provisions in the Decision No.13

b- Conditions:

- The conditions as stipulated in the Decision No.13

- Operating in a stable manner, using and mobilizing capital in the inter-bank market in accordance with provisions in Point 1.2, item c of Directive No.01/CT-NHNN dated 22/5/2009 of the Governor of State Bank on several measures of ensuring the prudential, effective business operation of credit institutions.

- The opening of branch does not disorder the interest rate market in the local area of the province, city where the commercial bank intends to open the new branch.

- Do not commit any act of serious violation to current provisions on currency and banking operation.

2.2- With respect to the number of branches and the areas considered for opening:

a) For the opening of a branch through upgrading an adjacent transaction office: the State Bank shall consider the opening of the branch upon the proposal of the commercial bank.

b) For the opening of a new branch:

(i) In the area of Hanoi or Ho Chi Minh city:

- For the commercial banks which have had 02 branches or more in each area of Hanoi or Ho Chi Minh city: temporarily stop considering the opening of new branch in these areas.

- For the commercial banks which have not had or have 01 branch only in each area of Hanoi or Ho Chi Minh city: State Bank shall consider to approve the opening of 02 branches at the maximum in each of these areas (including the approved branch).

(ii) In other provinces and cities:

The SBV shall consider the opening of the new branch upon the proposal of the commercial bank.

(iii) The SBV shall consider permitting one bank to open 02 branches at the maximum for each time. The SBV shall consider the further opening of a new branch after the approved branches have commenced their operation and put into stable operation.

3. Conditions for opening operation of transaction department and branch:

The commercial bank shall be entitled to open the operation of its transaction department, branch if it can meet the following conditions:

- Ensuring the conditions as stipulated in the Decision No.13 on operation opening;

- Availability of written evidences for legal ownership or legal use right of the office which is expected to be the transaction department/branch;

- Availability of enough key staff (Manager/Deputy Manager, Chief Accountant, Head of operational divisions) and ensuring the conditions as stipulated at Paragraph 4 Article 21 of Decree No.59/2009/ND-CP dated on 16/7/2009 of the Government on organization and operation of commercial banks.

- Availability of a written commitment on the opening of a new branch that will not disorder the interest rate market in the local area of the province, city where its branch is to be opened.

II- For the opening of a transaction office:

The commercial bank shall be authorized to open a transaction office if it can meet the following requirements:

1- With regard to procedures and documents:

1.1. For documents: including the followings:

(i) A written request, by the commercial bank, for the opening of transaction office;

(ii) A Resolution of the Board of Directors on opening transaction office;

(iii) Plan of opening transaction office.

1.2 For procedures:

The commercial bank shall prepare documents in accordance with provisions at Point 1.1 mentioned above and submit them to the State Bank branches in provinces, cities where it plans to open the transaction office for consideration and approval.

2- With regard to conditions for opening a transaction office:

The commercial bank shall be entitled to open a transaction office if it meets the following conditions:

a- For commercial banks:

The commercial bank’s operation in the year adjacent to the year applying for the opening of the transaction office must generate profit, it must ensure prudential ratios in the banking activity; it has performed the debt classification and made full provisions for risk in accordance with the regulation at the time of applying for the transaction office opening.

b- For the transaction department, commercial bank’s branch which plan to open a transaction office:

(i) Must have been operating for at least 01 year; its business generates profit and does not commit any serious act of violation to applicable provisions on currency and banking activity in the previous year adjacent to the year applying for the transaction office opening;

(ii) Rate of non-performing loan (NPL) is lower than 3% of total loans outstanding at the time of applying for the transaction office opening;

(iii) Director of the transaction department, branch manager must meet the conditions and standards in accordance with provision at Paragraph 4 Article 21 of Decree No.59/2009/ND-CP dated 16/7/2009 of Government on organization and operation of commercial banks; The transaction department and branch have enough key staff (including manager, deputy manager, chief accountant at the minimum).

(iv) Availability of information technology system that ensures the ability of the transaction department, branch to connect with the transaction office planed to open;

(v) Availability of a plan of opening the transaction office which clearly state necessity, operation contents, location, proposed key staff of the transaction office.

3- With regard to authority of consideration:

SBV branch in the place where the commercial bank intends to open a transaction office shall be responsible for:

- providing a written approval for opening a transaction office upon request of the commercial bank pursuant to the conditions and documents specified at point II.1 and II.2 above. In case of disapproval, a document clearly stating the reasons thereof is required.

- checking whether commercial banks ensure the conditions before the operation opening by the transaction office in accordance with provisions in point II.5 herein.

4- With regard to the number of transaction offices considered opening:

The SBV shall consider permitting one transaction department or branch of commercial bank to open 02 transaction offices at the maximum for each time. The SBV shall consider the further opening of a transaction office after the approved transaction offices have commenced their operation and put into stable operation

5- With regard to conditions of opening operation of a transaction office:

The commercial bank can open operation its transaction office if it can meet the following conditions:

- Having business registration certificate in accordance with provisions of applicable law;

- Having enough material facilities which can meet the operation requirements: headquarter, management information system, means of money transport in accordance with applicable provisions of the State Bank

- Availability of written evidence for the legal ownership and legal use right of the office which is expected to be the transaction office;

- Ensuring that the title of Head of Transaction office can fully meet the conditions in accordance with provisions of Paragraph 4 Article 21 of Decree No.59/2009/ND-CP dated 16/7/2009 of Government on organization and operation of commercial banks.

- Availability of a written commitment on the opening of a new branch that will not disorder the interest rate market in the local area of the province, city where its transaction office is to be opened.

Authorized by the SBV’s governor, banking inspection, supervision agency would like to inform for the knowledge and implementation by the State Bank branches in provinces and cities and commercial banks