One of the most noteworthy provisions of the new law is the right of the central bank to make an early intervention if signs of mass withdrawal of funds appear. 

The State Bank of Vietnam’s (SBV) early intervention can be made when credit institutions and foreign bank branches have accumulated losses 15 percent higher than their charter capital, allocated capital and reserve funds shown in the latest audited finance reports, or shown in conclusions released by agencies after inspections and auditing; and when they violate regulations on the capital adequacy ratio. 

Also, early interventions can be applied if commercial banks are ranked below the average level as stipulated; violate regulations on the solvency ratio for 30 consecutive days; violate regulations on the capital adequacy ratio for six consecutive months; or face mass money withdrawal and report the problem to SBV.

In these cases, SBV will release documents requesting credit institutions and foreign bank branches to update information and promptly apply measures to fix the problems. 

The commercial banks subjected to early intervention will also have to immediately apply restriction measures, and hire independent auditing firms to audit their finance reports and assess their financial capability situation. 

During the time when measures to fix problems are being applied, the credit institutions will enjoy support measures to be approved in written documents by SBV; and will follow the process of observing one or some restrictions and proportions. 

Meanwhile, capital contributors of the banks will have to follow a process on reducing their ownership ratios and capital contributions to obey the restrictions. SBV will finish early interventions when problems are solved (when they are merged or admitted into other credit institutions; are dissolved or go bankrupt, or are put under special control). 

The central bank can put a credit institution under special control if the institution falls into one of six cases. Also under the new law, from July 1, 2024, the Prime Minister will have the right to decide special loans to be provided to banks with no mortgaged assets and at zero percent interest rate. 

SBV will have to the right to make decisions for loans with interest rates and mortgaged assets. Regarding the ceiling ownership ratio one individual can have, the figure is 5 percent. 

The ceiling ratio for one institutional shareholder has been reduced from 15 to 10 percent; and the ceiling ratio for shareholders and related persons from 20 percent to 15 percent. 

Thu Hang