A COMMERCIAL BANK MAY ONLY PURCHASE, HOLD STOCKS OF NO MORE THAN TWO OTHER CREDIT INSTITUTIONS
On November 15, 2019, the State Bank of Vietnam issues the Circular No. 22/2019/TT-NHNN on limits and prudential ratios in operations of banks and/or foreign bank branches.
In particular, banks and branches of foreign banks are entitled to purchase and invest in government bonds and government-backed bonds against total average liabilities of the preceding month under the maximum ratio of 30%.
In addition, newly established banks and branches of foreign banks (Excluding credit institutions re-organized under the Law on Credit Institutions) whose operation period is under 02 years from the beginning day of operation and total liabilities are smaller than charter capital or allocated fund are entitled to purchase and invest in government bonds and government-backed bonds under the maximum rate of 30% to their charter capital or allocated fund.
This Circular also prescribes: A commercial bank may only purchase or hold stocks of no more than 02 other credit institutions, except cases where other credit institutions are its subsidiary companies. Concurrently, a commercial bank may only purchase or hold stocks of another credit institution at a ratio of under 5% of the voting equity of such credit institution.
This Circular takes effect on January 01, 2020.
