The State Bank of Vietnam (SBV) has recently posted on its website www.sbv.gov.vn two draft circulars guiding monetary brokerage and debt trading activities to gather comments from legal experts and bankers.
In April 2004, the SBV issued Decision No. 351/2004/QĐ-NHNN, promulgating the Regulation on monetary brokerage, officially recognizing and legalizing the services. But since then no specific guidance has been introduced, consequently, no monetary brokerage license has been granted yet.
To address this matter, the SBV is considering replacing the existing regulation with a new circular specifying conditions on the grant of monetary brokerage licenses.
Accordingly, to be licensed to provide monetary brokerage services, commercial banks and foreign bank branches must operate profitably in the year preceding the year of application for a license; satisfy SBV requirements on prudential ratios in banking operations at the time of application for a license; have an effective internal control system, adequate physical and technical foundations and information technology and communication equipment for provision of the services. They would also be required to set up an independent monetary brokerage section.
In other cases, the SBV would grant monetary brokerage licenses if applying entities are multiple-member limited liability companies or joint-stock companies set up and operating in
The SBV also plans to revise regulations on credit institutions’ debt trading activities which are currently governed by Circular No. 59/2006/TT-NHNN.
As proposed by the SBV, not only domestic credit institutions but foreign bank branches would be allowed to sell or buy debts. However, foreign bank branches may not buy debts owed by non-residents in international markets. Debt trading would also be banned in case debts or debt security measures are still in dispute.
In order to enhance responsibilities of involved parties, debt sellers and buyers must be fully aware of possible risks and take responsibility for their decisions on debt sale and purchase. After going through all legal steps set for debt trading, debt buyers would become lenders in such debt relationships and, therefore, be required to comply with the law on grant of credit. In case of selling/buying medium- or long-term debts, leading to the formation of a loan relationship or arising of a foreign loan, involved parties would make registration with the SBV as required by the law on borrowing and repayment of overseas loans. Those unlicensed to deal in foreign exchange may not buy foreign-currency debts. Debt buyers must account purchased debts into their total outstanding credit which, in any cases, must be kept within their credit limits.-