SBV enhances control of corporate bond investments by credit institutions and foreign banks’ branches

 

Press release on issuance of Circular No.15/2018/TT-NHNN

On June 18, 2018, the Governor of the State Bank of Vietnam (SBV) issued Circular No.15/2018/TT-NHNN dated June 18 to revisinge and supplementing a number of some articles of Circular No.22/2016/TT-NHNN dated June 30, 2016 regulating the stipulated on corporate bond purchasesing corporate bonds by the credit institutions and the foreign banks’ branches in Vietnam.

Circular No.15/2018/TT-NHNN was issued to revise the regulations on the corporate bond purchasesing corporate bonds by the credit institutions and the foreign banks’ branches in order to be in line with the applicable laws and the current practices of purchasing corporate bonds.

The issuance of this new Circular is also aimed atfor the aim of accelerating enhancing the stringent control of the corporate bond investmentsstrict supervision and management of the investment on corporate bonds conducted by the credit institutions and the foreign banks’ branches in order to ensure the safe and sound banking performanceoperations.

The main substancescontents of Circular No.15/2018/TT-NHNN are as follows:

1. Revising point (d) and supplementing point (đ) of iItem 2, Article 3 of Circular No.22/2016/TT-NHNN;. Aaccordingly, credit institutions and foreign banks’ branches that wish to purchase, who buy corporate bonds, are required to have anformulate the internal policy on credit ratings system, conductclassification and ratingsclassification of the bond issuing corporate(s)ions, and have issuedto stipulate internal regulations on corporate bond purchasesing of corporate bonds in line with the regulations of this CircularCircular No.15/2018/TT-NHNN and other applicable laws. The internal regulations shall contain at the minimum the following regulationsThe credit institutions and foreign banks’ branches are required to include such contents in their regulations as follows:

- For item point (d): The internal management regulations on internal supervision of corporate bond purchasesing corporate bonds, especially the bonds issued for the implementationpurpose of investing in the risky projects and/or programs in the potentially risky areas, with a view to detecting the in order to avoid risks and possible violations, and to ensuringe the possibilitiesy of collecting the principals and the yields of the issued corporate bonds.

- For item point (đ): Specific regulations on potentially risky areasfields, and the credit and investment policiesy of lending to and investment on these fields for these areas.

2. Supplementing iItem 6 of aArticle 3 to include a regulation stipulatinges that credit institutions and foreign banks’ branches are not allowed to buy any corporate bonds issued by a corporation for the purposes of restructuring a corporate’se debts of the corporation.

Circular No.15/2018/TT-NHNN takes effect from August 2nd, 2018

Circular No.15/2018/TT-NHNN was issued to revise the regulations on the corporate bond purchases by the credit institutions and the foreign banks’ branches in order to be in line with the applicable laws and the current practices of purchasing corporate bonds.

The issuance of this new Circular is also aimed at enhancing the stringent control of the corporate bond investments conducted by the credit institutions and the foreign banks’ branches in order to ensure the safe and sound banking operations.

The main substances of Circular No.15/2018/TT-NHNN are as follows:

SBV revised point (d) and supplementing point (đ) of Item 2, Article 3 of Circular No.22/2016/TT-NHNN. Accordingly, credit institutions and foreign banks’ branches that wish to purchase corporate bonds are required to have an internal credit ratings system, conduct ratings of the bond issuing corporate(s), and have to issue internal regulations on corporate bond purchases in line with the regulations of this Circular and other applicable laws.

The internal regulations shall contain at the minimum the following regulations such as the internal management regulations on corporate bond purchases, especially the bonds issued for the implementation projects and/or programs in the potentially risky areas, with a view to detecting the risks and possible violations, and ensuring the possibilities of collecting the principals and the yields of the issued corporate bonds; and the specific regulations on potentially risky areas, and the credit and investment policies for these areas.

Circular 15/2018/TT-NHNN supplemented Item 6 of Article 3 of Circular No.22/2016/TT-NHNN to include a regulation stipulating that credit institutions and foreign banks’ branches are not allowed to buy any corporate bonds issued for the purpose of restructuring a corporate’s debts.

Circular No.15/2018/TT-NHNN takes effect from August 2nd, 2018

MH