Banking activities in Vietnam is governed by the Law on the State Bank of Vietnam and the Law on Credit Institutions both passed on 16 June 2010 and their implementing decrees, circulars and decisions issued by the Government and the State Bank of Vietnam (“SBV”).

Generally viewed, banking and financial business are highly regulated in Vietnam. Banking and financial institutions are only permitted to engage in transactions and provide the services specifically named in their licenses. Derivative, forex, and cryptocurrency products are either not allowed or strictly regulated.

Management Forms of Credit Institutions

Banks established in Vietnam operate under one of the following permitted forms:

• State-owned banks established and organized in the form of a SM-LLC where 100% of the charter capital is owned by the State;
• Joint stock commercial banks;
• JV bank established and organized in the form of a LLC; or
• Foreign-owned banks established and organized in the form of a WFIE.

Restrictions on Foreign Ownership

Acquisition by foreign entities of a shareholding in a Vietnamese commercial joint stock bank is subject to the approval of the SBV.

As a rule, the total shareholding of any foreign organization must not exceed 15%, and the shareholding of any foreign individual may not exceed 5% of the charter capital (i.e., share capital) of a Vietnamese bank. However, the law permits (i) a “strategic foreign investor” or (ii) a foreign investor and its affiliated persons to acquire up to 20% of the charter capital of a Vietnamese bank. The total aggregate shareholding of foreign investors in a Vietnamese bank may not exceed 30% of its charter capital (exceptions may be given by the Prime Minister to weak credit institutions for restructuring purposes on a case-by-case basis).

Foreign-owned banks, in which one of the foreign shareholders is a parent bank holding a majority equity interest, can be established in Vietnam. Among other requirements, the parent bank must have total assets of more than USD10 billion at the end of the year prior to application.

Foreign banks may also open a branch(es) which has no independent legal status. The parent bank must satisfy, among other things, the conditions that it has total assets of more than USD20 billion at the end of the year prior to its application for the establishment of a branch. A foreign bank branch may not open transaction offices outside the branch office.

A foreign bank may also set up its representative office in Vietnam in which the representative office acts as a liaison office, conducts market research and the promotion of the parent bank’s business in Vietnam. A representative office is not permitted to engage in revenue-generating activities.