CONDITIONS FOR ESTABLISHING A BRANCH OF A FOREIGN BANK IN VIETNAM

Legal situation: We are a credit institution (bank) in South Korea. In 2025, we plan to establish a bank branch in Vietnam. Could you please consult us about the conditions for establishing a branch  of a foreign bank in Vietnam?

FDVN’s Opinion:

Thank you for submitting your question to FDVN Law Firm (“FDVN”). In response to your consultation request, after researching relevant legal regulations, FDVN would like to present our opinion as follows:

Pursuant to Clause 3, Article 29 of Law on Credit Institutions 2024, a foreign bank’s branch may obtain a license when fully meeting the following requirements:

– Its provided capital is not smaller than the legal capital;

– It fully meets requirements specified in Points b,c and dd Clause 1 and Points b,c,d and e Clause 2, Article 29 of Law on Credit Institutions 2024, specifically:

 + Its owner is a single-member limited liability company and its founding shareholders or members are juridical persons that are legally operating and financially capable for capital contribution. Its founding shareholders or members are individuals that have full legal capacity and are financially capable for capital contribution;

+ Its managers, executives and members of the Board of Controllers fully meet the criteria and requirements under Article 41 of this Law;

+  It has an establishment plan and a feasible business plan which neither affect the safety and stability of the credit institution system nor create monopoly or restrict competition or create unfair competition within the credit institution system.

+ The foreign credit institution may conduct banking operations under the law of the country where it is headquartered;

+ Operations to be conducted in Vietnam must be those which the foreign credit institution is issued with license to conduct in the country where it is headquartered;

+ The foreign credit institution meets requirements for total assets and financial status under regulations of the Governor of State Bank, and satisfies regulations on assurance of operation safety under regulations of the country where it is headquartered;

+  A competent authority of the country where the foreign credit institution is headquartered has signed an agreement with the State Bank on inspection and supervision of banking operations and exchange of information on banking safety supervision and made a written commitment on consolidated supervision of the foreign credit institution’s operations according to international practices.

– The foreign bank shall make a written commitment to be liable for all obligations and commitments of its branch in Vietnam, and to ensure that the actual value of the provided capital is not lower than the legal capital and it observes regulations on assurance of operation safety under this Law.

– If it is required to establish the second foreign bank’s branch and subsequent foreign bank branches in Vietnam, the foreign bank shall ensure that the foreign bank’s branch which is operating in Vietnam for 03 years preceding the year of the proposal to establish new branches does not commit violations against regulations of law, achieves the minimum safety ratios, and earns profits.

The above is the legal advice of FDVN related to your consultation request based on research of legal regulations. We hope FDVN’s advice will be helpful to you.

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