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STATE BANK OF
VIETNAM
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SOCIALIST
REPUBLIC OF VIETNAM
Independence - Freedom – Happiness
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No. 22/VBHN-NHNN
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Hanoi, July 16,
2024
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CIRCULAR
on corporate bond trading of credit
institutions and branches of foreign banks
Circular No. 16/2021/TT-NHNN dated November 10,
2021 of the Governor of the State Bank of Vietnam on corporate bond trading of
credit institutions and foreign bank branches, which comes into force from
January 15, 2022, is amended by:
Circular No. 11/2024/TT-NHNN dated June 28, 2024 of
the Governor of the State Bank of Vietnam on amendments to Circular No.
16/2021/TT-NHNN dated November 10, 2021 of the Governor of the State Bank of
Vietnam on corporate bond trading of credit institutions and foreign bank branches,
which comes into force from August 12, 2024.
Pursuant to the Law on State Bank of Vietnam
dated June 16, 2010;
Pursuant to the Law on Credit Institutions dated
June 16, 2010 and the Law on amendments to the Law on Credit Institutions dated
November 20, 2017;
Pursuant to the Law on Securities dated November
26, 2019;
Pursuant to the Law on Enterprises dated June
17, 2020;
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Pursuant to Decree No. 155/2020/ND-CP dated
December 31, 2020 of the Government elaborating on certain Articles of the Law
on Securities;
Pursuant to Decree No. 16/2017/ND-CP dated
February 17, 2017 of the Government on functions, tasks, powers and
organizational structure of the State Bank of Vietnam;
At the request of the Director of the Financial
Policy Department;
The Governor of the State Bank of Vietnam hereby
promulgates a Circular on corporate bond trading of credit institutions and
foreign bank branches, promulgated by the Governor of State Bank of Vietnam
[1].
Article 1. Scope
1. This Circular provides for the corporate bond
trading of credit institutions and foreign bank branches within the territory
of the Socialist Republic of Vietnam.
2. This Circular does not prescribe trading of
corporate bond issued by credit institutions; trading of corporate bond issued
by Single-member Limited liability Vietnam Asset Management Company; purchase
of corporate bond in form of discount; trading of corporate bond between credit
institutions, branches of foreign banks under forward contracts; trading of
corporate bond issued in international market; trading of corporate bond in
form of rediscount.
3. Corporate bond trading of credit institutions
placed under special control shall conform to decision of State Bank of Vietnam
for each credit institution placed under special control.
4. [2] Corporate bond trading between credit
institutions under special control and assisting credit institutions or
compulsory transferees shall conform to solutions for restructuring credit
institutions under special control approved by competent authority.
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1. Credit institutions and foreign bank branches
(hereinafter collectively referred to as “credit institutions”) which are
established and operating according Law on Credit Institutions [3].
2. Bond issuing enterprises which are joint-stock
companies and limited liability companies which are established and operating
according to regulations and law of Vietnam.
3. Other individuals and organizations related to
the trading of corporate bond under this Circular.
Article 3. Interpretation of
terms
For the purposes of this Circular, the terms below
shall be construed as follows:
1. “corporate bond” is a type of debt security with
a term to maturity of at least 01 year, issued by an enterprise to confirm the
bondholder's legitimate rights and interests over a part of its debts.
2. “convertible bond” means a type of bonds which
are issued by a joint-stock company and can be converted into a number of
common shares of the issuer under terms and provisions predetermined in the
bond issuance plan.
3. “secured bond” means a type of bonds whose
principal and interest payments, when they become due, are entirely or
partially secured by a specific asset of the issuer or a third party in
accordance with law regulations on secured transactions, or guaranteed in
accordance with regulations of law.
4. “warrant-linked bonds” means a type of bonds
which are issued by a joint-stock company with warrants that entitle
bondholders to buy a specific number of common shares of the issuer under terms
and provisions predetermined in the bond issuance plan.
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Article 4. Corporate bond
trading principles
1. Credit institutions may trade corporate bond in
accordance with corporate bond trading provisions under the Permit issued by
the State Bank of Vietnam.
2. Corporate bond trading of credit institutions
must conform to the Law on Credit Institutions [4], Law on Securities, Law on
Enterprises, this Circular, and relevant law provisions.
3. Credit institutions that trade corporate bond
must have available internal credit rating system and must promulgate internal
regulations on corporate bond trading in accordance with this Circular and
relevant law provisions.
4. Credit institutions that purchase convertible
bond or warrant-linked bonds must comply with the Law on Credit Institutions
[5], guidelines of State Bank of Vietnam on capital contribution and share
purchase, and relevant law provisions.
5. A credit institution is only allowed to purchase
corporate bond when their non-performing loan ratio is less than 3% in the
latest classification according to regulations of the State Bank of Vietnam on
classification of existing assets, amount of risk provisions, methods of
setting up risk provisions, and the use of risk provisions in operations of
credit institutions prior to the day of corporate bond purchase.
6. A credit institution is only allowed to purchase
corporate bond when:
a) Corporate bond satisfies Article 5 hereof;
b) Use purpose of revenues generated from corporate
bond issue is legitimate and compliant with bond issuance plans and/or plans
for utilizing capital, revenues generated from bond offering and issuance
approved as per the law (hereinafter collectively referred to as “plans”);
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d) The plans are feasible and the issuer is
financially capable in order to settle both principal and interest of the bond
adequately;
dd) The issuer has no non-performing loan in credit
institutions in the last 12 months prior to the date on which credit
institutions purchase corporate bond.
7. In addition to satisfying other regulations
under this Article, credit institutions are only allowed to purchase corporate
bond whose issuer has repurposed revenues generated by bond issuance as per the
law prior to the date on which credit institutions purchase corporate bond if
the issuer is at the highest rating according to the latest internal credit
rating system of the credit institutions.
8. A credit institution is not allowed to purchase
corporate bond when:
a) One of the purposes of issued corporate bond is
to restructure debts of the issuer;
b) One of the purposes of issued corporate bond is
to contribute capital and/or purchase share in other enterprises;
c) One of the purposes of issued corporate bond is
to increase working capital.
9. A credit institution is not allowed to sell
corporate bond to their subsidiaries, except for cases where the credit
institution which acts as the agent in a mandatory transfer is required to sell
corporate bond to a financial institution which acts as the receiver in a
mandatory transfer.
10. Branches of foreign banks are not allowed to
purchase convertible bonds or warrant-linked bonds.
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12. [7] (annulled)
13. The currency used in corporate bond trading is
VND.
14. [8] An issuer must send a credit institution
information about related persons according to the provisions of the Law on
Credit Institutions before the credit institution purchases corporate bonds.
Related persons of the issuer are organizations or individuals that have a
relationship with the issuer according to the provisions of Clause 24, Article
4 of the Law on Credit Institutions.
Information about a related individual, including:
Full name; personal identification number (PIN); nationality, passport number,
date of issue, place of issue (if the individual is a foreigner); relationship
with the issuer;
Information about a related organization,
including: name, business code, head office address of the organization, number
of Business Registration Certificate or equivalent legal documents; legal
representative, relationship with the issuer.
15. [9] Credit institutions must use non-cash
payment services when making payments in corporate bond trading in accordance
with non-cash payment laws.
Article 5. Corporate bond
eligible for trading
A corporate bond is eligible for trading when all
requirements below are satisfied:
1. The corporate bond is issued in accordance with
regulations and law.
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3. The corporate bond is under legal ownership of
the seller, has not reached maturity which requires payment of both principal
and interest, is not subject to any dispute, is allowed to be traded as per the
law, is not under forward contract or discount contract or rediscount contract
as guaranteed by the seller (except for cases where a credit institution
purchases corporate bond to sell for the first time).
Article 6. Internal regulations
1. Pursuant to the Law on Credit Institutions [10],
this Circular, and relevant law provisions, credit institutions shall promulgate
and, on an annual basis, review internal regulations on corporate bond trading
depending on management model, operating activities, and prudence of credit
institution operation (hereinafter referred to as “internal regulations”).
2. Internal regulations must clarify
responsibilities and obligations of each entity and individual involved in
corporate bond trading.
3. Internal regulations must contain operational
procedures and risk management regulations for corporate bond trading.
4. Pursuant to this Circular and relevant law
provisions, within 10 working days from the date on which credit institutions
promulgate and amend internal regulations on corporate bond trading:
a) Credit institutions shall send their internal
regulations to the State Bank of Vietnam (via Bank Supervision and Inspection
Agency), except for cases under Point b of this Clause;
b) Credit institutions that are subject to
microprudential supervision and inspection of branches of State Bank of Vietnam
of provinces and central-affiliated cities shall send their internal
regulations to the respective branches of State Bank of Vietnam.
Article 7. Responsibilities of
credit institutions in purchasing corporate bonds
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2. [11] Monitor and supervise the use of revenues
generated by corporate bond issuance of the issuers; in case the issuers are
found to be using revenues generated by corporate bond issuance incorrectly
according to the plans and commitment with credit institutions, credit
institutions shall request the issuers to repurchase corporate bonds under
forward contracts. In case the issuers do not repurchase corporate bonds under
forward contracts according to the commitments and requests of the credit
institutions, the credit institutions shall handle and recover the bond
principal and interest in accordance with the provisions of law.
3. Request the issuers to settle both principal and
interest of corporate bonds when the bonds reach maturity. In case the issuers
are incapable of settling principal or interest of corporate bonds that reach
maturity or when the issuers fail to repurchase corporate bonds under forward
contracts according to commitment under Point c Clause 6 Article 4 hereof,
credit institutions shall collect principal and interest of corporate bonds.
4. During the period in which credit institutions
are holding corporate bonds, the credit institutions must assess business
operations of the issuers, financial situations, and the ability to settle corporate
bond principal and interest of the issuers at least once every 6 months.
5. Deal with issues that arise during the process
of trading corporate bonds in accordance with relevant law provisions in order
to guarantee the ability to recover principal and interest of corporate bonds.
Article 8. Corporate bond
purchase limit
1. [12] The total corporate bond purchase balance
(including bonds issued by an enterprise and its related persons) shall be
included in total amount of credit extended of a customer or a customer and a
related person according to the Law on Credit Institutions and regulations of
the State Bank of Vietnam on prudential limits and ratios in operations of
credit institutions.
2. Credit institutions shall elaborate on corporate
bond purchase limits: Corporate bonds of an issuer; corporate bonds of an
issuer and a related person; secured bonds; non-secured bond; readily
marketable bonds; bonds held until maturity; corporate bonds being traded.
Article 9. Classification,
setting up for risk provisions, and risk control, management of corporate bond
purchase balance
1. For corporate bonds that have been listed on
securities market or have been registered for trading on the Upcom trading
system, credit institutions shall set up and utilize risk provisions in
accordance with regulations and law on setting up and utilizing provision
against devaluation of inventory, losses of investment, bad debts, and
warranties of products, commodities, services, and constructions at
enterprises.
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Article 10. Record,
accounting, statistics, and storage of documents on corporate bond trading
1. Credit institutions shall record any corporate
bond trading in accordance with regulations and law on accounting.
2. Credit institutions shall product statistical
reports on corporate bond trading, including corporate green bond in accordance
with regulations of State Bank of Vietnam on statistical reporting regime of
credit institutions.
3. Credit institutions shall store documents on
corporate bond trading in accordance with regulations and law on storing credit
documents.
Article 11. Transition clauses
For corporate bond trading contracts signed before
the effective date hereof, credit institutions and customers continue to comply
with signed corporate bond trading contracts in accordance with regulations and
law applicable at the time of signing. Any detail of the contracts revised
after the effective date hereof must conform to this Circular.
Article 12. Implementation
clauses [13]
1. This Circular comes into force from January 15,
2022.
2. The following documents expire from the
effective date hereof:
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b) Circular No. 15/2018/TT-NHNN dated June 18, 2018
on amendment to Circular No. 22/2016/TT-NHNN .
Article 13. Implementation
Chief of Office, Director of Financial Policy
Department, heads of entities affiliated to State Bank of Vietnam, directors of
branches of State Bank of Vietnam in provinces and central-affiliated cities,
credit institutions, and foreign banks are responsible for organizing
implementation of this Circular./.
CERTIFIED BY
PP. GOVERNOR
DEPUTY GOVERNOR
Doan Thai Son
[1]
Circular No. 11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN
dated November 10, 2021 of the Governor of the State Bank of Vietnam on
corporate bond trading of credit institutions and foreign bank branches, is
pursuant to:
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The Law on Credit Institutions dated January 18,
2024;
Decree No. 102/2022/ND-CP dated February 12,
2022 of the Government on function, tasks, powers and organizational structures
of the State Bank of Vietnam;
At the request of the Director of the Financial
Policy Department;
The Governor of the State Bank of Vietnam hereby
promulgates a Circular on amendments to Circular No. 11/2024/TT-NHNN on
amendments to Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the
Governor of the State Bank of Vietnam on corporate bond trading of credit
institutions and foreign bank branches.”
[2]
This Clause is amended as prescribed in clause 1 Article 1 of Circular No.
11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN dated November
10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading
of credit institutions and foreign bank branches, which comes into force from
August 12, 2024.
[3]
The phrase “Luật Các tổ chức tín dụng (đã được sửa đổi, bổ sung)”
("amended Law on Credit Institutions") is replaced with the phrase
"Luật Các tổ chức tín dụng” (“Law on Credit Institutions”) according to
the provisions in clause 1 Article 2 of Circular No. 11/2024/TT-NHNN on
amendments to Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the
Governor of the State Bank of Vietnam on corporate bond trading of credit
institutions and foreign bank branches, which comes into force from August 12,
2024.
[4]
The phrase “Luật Các tổ chức tín dụng (đã được sửa đổi, bổ sung)”
("amended Law on Credit Institutions") is replaced with the phrase
"Luật Các tổ chức tín dụng” (“Law on Credit Institutions”) according to
the provisions in clause 1 Article 2 of Circular No. 11/2024/TT-NHNN on
amendments to Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the
Governor of the State Bank of Vietnam on corporate bond trading of credit
institutions and foreign bank branches, which comes into force from August 12,
2024.
[5]
The phrase “Luật Các tổ chức tín dụng (đã được sửa đổi, bổ sung)”
("amended Law on Credit Institutions") is replaced with the phrase
"Luật Các tổ chức tín dụng” (“Law on Credit Institutions”) according to
the provisions in clause 1 Article 2 of Circular No. 11/2024/TT-NHNN on
amendments to Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the
Governor of the State Bank of Vietnam on corporate bond trading of credit
institutions and foreign bank branches, which comes into force from August 12,
2024.
[6]
This Clause is annulled as prescribed in clause 2 Article 2 of Circular No.
11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN dated November
10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading
of credit institutions and foreign bank branches, which comes into force from
August 12, 2024.
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[8]
This Clause is supplemented as prescribed in clause 2 Article 1 of Circular No.
11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN dated November
10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading
of credit institutions and foreign bank branches, which comes into force from
August 12, 2024.
[9]
This Clause is supplemented as prescribed in clause 3 Article 1 of Circular No.
11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN dated November
10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading
of credit institutions and foreign bank branches, which comes into force from
August 12, 2024.
[10]
The phrase “Luật Các tổ chức tín dụng (đã được sửa đổi, bổ sung)”
("amended Law on Credit Institutions") is replaced with the phrase
"Luật Các tổ chức tín dụng” (“Law on Credit Institutions”) according to
the provisions in clause 1 Article 2 of Circular No. 11/2024/TT-NHNN on
amendments to Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the
Governor of the State Bank of Vietnam on corporate bond trading of credit
institutions and foreign bank branches, which comes into force from August 12,
2024.
[11]
This Clause is amended as prescribed clause 4 Article 1 of Circular No.
11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN dated November
10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading
of credit institutions and foreign bank branches, which comes into force from
August 12, 2024.
[12]
This Clause is amended as prescribed in clause 5 Article 1 of Circular No.
11/2024/TT-NHNN on amendments to Circular No. 16/2021/TT-NHNN dated November
10, 2021 of the Governor of the State Bank of Vietnam on corporate bond trading
of credit institutions and foreign bank branches, which comes into force from
August 12, 2024.
[13]
Article 3 and Article 4 of Circular No. 11/2024/TT-NHNN on amendments to
Circular No. 16/2021/TT-NHNN dated November 10, 2021 of the Governor of the State
Bank of Vietnam on corporate bond trading of credit institutions and foreign
bank branches, which comes into force from August 12, 2024, provide for:
“Article 3. Responsibilities for
implementation
Chief of Office, Director of Financial Policy
Department, heads of entities affiliated to State Bank of Vietnam, directors of
branches of State Bank of Vietnam in provinces and central-affiliated cities,
credit institutions, and foreign banks are responsible for organizing
implementation of this Circular.
Article 4. Implementation clauses
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2. For corporate bond trading contracts signed
before the effective date hereof, credit institutions and customers continue to
comply with signed corporate bond trading contracts in accordance with
regulations and law applicable at the time of signing. Any detail of the
contracts revised after the effective date hereof must conform to this
Circular./.