Limiting Bank Network Expansion

The Governor of the State Bank of Vietnam (SBV) issued Circular No. 21/2013/TT-NHNN on operational network of commercial banks, which takes effect on October 23, 2013. Conditions for opening branches are tightened.

 

To open new branches, commercial banks must have profit in audited consolidated financial statements and audited separate financial statements of the preceding year. Nonperforming loans of the preceding year must not exceed 3 percent or another percentage level decided by the SBV Governor. Besides, they must make full provisioning.

 

SBV states that a bank only can open at most 10 branches in one locality in the downtown of Hanoi and Ho Chi Minh City and it shall not open five branches in the same financial year. If a bank operates in less than 10 months, it cannot open more than three branches and they cannot be in the same province or city.

 

This circular also specifies the minimum capital of a branch. Accordingly, a branch must have at least VND300 billion of capital, three times that of the previously stipulated amount.