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| Lawful rights and interests of clients and creditors must be guaranteed during the merger and consolidation process__Photo: VNA |
The State Bank of Vietnam has recently unveiled a draft circular proposing that any merger and consolidation of credit institutions must meet five principles.
Firstly, the merger and consolidation of credit institutions would be required to comply with stakeholders’ agreements and ensure the normal operation of the credit institutions.
Secondly, lawful rights and interests of clients and creditors must be guaranteed during the merger and consolidation process, which must also comply with this draft circular and other relevant laws.
Thirdly, information must be kept confidential to ensure the stable operation of the credit institutions engaged in the merger and consolidation before the merger and consolidation projects are approved. The merger and consolidation must also ensure the principles of prudence, honesty, accuracy and no misunderstanding in term of dossiers and documents.
Fourthly, the dissipation of assets in any form must be strictly prohibited. The transfer and sale of assets during the merger and consolidation process must ensure publicity, transparency, compliance with law and stakeholders’ agreements, the safety of assets and not affect the rights of the credit institutions and related organizations and individuals.
Fifthly, the establishment and operation licenses of to-be-consolidated credit institutions would be invalid when the consolidating credit institutions commence their operations. For to-be-merged credit institutions, their establishment and operation licenses would be invalid when the State Bank modifies the establishment and operation license of the merging credit institutions.
Also required by the draft circular, the credit institutions engaged in merger and consolidation must not belong to the prohibited economic concentration cases, except cases exempted from the prohibited economic concentration according to the Law on Competition. The credit institutions must also have merger and consolidation projects approved by competent authorities. After the merger and consolidation, the merged and consolidated credit institutions must comply with the law on safety limits and ratios, capital contribution ratios, share ownership and banking operating conditions.- (VLLF)
