Vietnam's new Law on Credit Institutions addresses emerging challenges: Freshfields
The introduction of the 2024 Law on Credit Institutions, effective from July 1, 2024, reflects the government’s commitment to enhancing the stability, transparency, and efficiency of the banking sector, while also addressing emerging challenges and aligning with international best practices, write Eric Johnson, a partner at Freshfields Bruckhaus Deringer law firm, and senior associate An Hoang Ha.

Eric Johnson, Freshfields Bruckhaus Deringer partner. Photo courtesy of the law firm.
The 2024 Law on Credit Institutions (the 2024 CIL) took effect on July 1, 2024, replacing the current law which was introduced in 2011 (the 2010 CIL).
This brief note summaries certain selected key changes in the 2024 CIL that are most relevant to M&A/foreign investment projects in the banking sector in Vietnam and some notable provisions of the 2024 CIL.
Ownership limits for local investors
The 2024 CIL introduces significant changes to the shareholding limits for institutional shareholders, and shareholders and their related persons in a local joint stock credit institution. Such changes, however, do not apply to foreign investors.
Under the 2024 CIL, the maximum shareholding of a local individual in a joint stock credit institution is still kept at 5% of the credit institution’s charter capital. However, the shareholding of institutional shareholders of a joint stock credit institution is adjusted from 15% to 10% of the charter capital, and the total shareholding of one local shareholder and their related persons in such credit institution is reduced from 20% to 15% of the charter capital.
The ownership includes direct or “indirect ownership”. However, the definition of “indirect ownership” has been tightened up and thus, it results in a narrower list of entities that would be caught by the definition.
It is expected that the government may provide more detailed information about the maximum foreign ownership and conditions applicable to foreign investors separately.
The current position set out in Decree 01/2014/ND-CP (Decree 01) is that a foreign institutional shareholder (that is not a foreign strategic investor), on its own, can hold a maximum of 15% of the charter capital of a local joint stock credit institution, whilst a foreign strategic investor, by itself, can hold up to a maximum of 20% of the charter capital of such credit institution.
Foreign investors and their related persons are limited to a maximum of 20% of the charter capital of such credit institution. Additionally, the total shareholding of all foreign shareholders in a joint stock commercial bank must not exceed a total of 30% of the charter capital of such joint stock commercial bank.
To determine if there will be any changes to these maximum shareholding limits for foreign shareholders in the future, foreign investors will need to wait for the issuance of a new decree that, if issued, would be expected to replace Decree 01.

An Hoang Ha, a senior associate at Freshfields Bruckhaus Deringer. Photo courtesy of the law firm.
Major shareholders no longer require SBV approval to sell shares
The 2010 CIL stipulates that all transactions, including purchases, sales, and transfers of shares that would result in a shareholder of a joint stock credit institution becoming a major shareholder (i.e., owning 5% or more of the charter capital), as well as those that would result in a major shareholder becoming a non-major shareholder of such joint stock credit institution, required written approval from the State Bank of Vietnam (the SBV).
However, under the 2024 CIL, the requirement for SBV approval has been relaxed. Presently, only transactions involving the purchase, or transfer of shares of a local joint stock credit institution that would result in (i) a non-major shareholder becoming a major shareholder or (ii) an outside investor becoming a major shareholder, will require SBV approval.
This change makes sense and represents a shift towards a more streamlined and efficient regulatory framework, allowing for a more flexible and expedited process for transactions within the banking sector.
Changes in banking businesses
Prohibition on “bundling” or “tying” insurance products and banking products
The 2024 CIL includes the activity of “bundling” or “tying” non-compulsory insurance products with the provision of banking products and services in the list of prohibited actions for credit institutions and foreign bank branches.
This is a measure that has long been expected and which strengthens a similar prohibition in Circular 67/2023/TT-BTC guiding the Insurance Business Law issued by the Ministry of Finance of Vietnam.
Introduction of security agency service
The 2024 CIL introduces additional provisions to the existing regulations on the business activities of a commercial bank. The most notable change is the business activity of acting as a security agent on behalf of lenders who are international financial institutions, offshore credit institutions, onshore credit institutions, and foreign bank branches.
In practice, commercial banks in Vietnam have performed this role from time to time prior to the 2024 CIL, and this change now provides a clear legal basis for undertaking of such role.

The U.S. dollar and the dong are seen during a transaction at a bank in Vietnam. Photo courtesy of VietNamNet.
Other notable provisions
Reduction of lending limits
From July 1, 2024, a new regulation that gradually reduces lending limits for commercial banks and foreign bank branches came into effect. This initiative aims to promote a more stable banking system.
Under the new regulation, the maximum loan amount a commercial bank can extend to a single borrower decreased from 15% to 14% of its equity, and to a single borrower together with its related persons, decreased from 25% to 23%.
From January 1, 2029 onward, these limits will be further lowered to 10% and 15%, respectively.
Similarly, the lending limits for a finance company have been reduced from 25% to 15% of its equity for a single customer and from 50% to 25% of its equity for a single customer together with its related persons.
New regulations aim to speed up bank restructuring and manage bank runs
Under the 2024 CIL, new regulations have been introduced to address issues with weak bank mergers and potential bank runs. These include:
- Clearer guidelines for dealing with weak banks: Chapters on early intervention, special control, dissolution, and bank runs provide a more defined approach to restructuring in the banking sector.
- New mechanism for handling bank runs: Banks must report mass withdrawals to the SBV and take necessary steps, such as suspending dividend distribution, lowering lending limits, and implementing remedial plans.
- Support for struggling banks: During a bank run, the SBV can offer support such as buying valuable papers in the open market operation with zero interest, providing foreign exchange liquidity, and providing special loan to the bank.
Enhancing regime on providing information and disclosure
The 2024 CIL imposes enhanced disclosure requirements on certain individuals and entities associated with credit institutions in Vietnam, including board members, member of supervisory board, general director/CEO, deputy general director/deputy CEO of the credit institutions, and shareholders owning 1% or more of the charter capital of a joint stock credit institution.
They must disclose, among others, information about their related persons, enterprises they are involved with, and changes in shareholdings that meet the relevant threshold. This information must be published, reported to the SBV, and annually disclosed to the credit institution's governing bodies, promoting transparency.
Compared to the 2010 CIL, the new disclosure requirements are more onerous, and the related persons are now broadened to include several additional relationships, such as step-parents, step-children, and in-laws, grand-children.
Transitional provisions
The 2024 CIL took effect on July 1, 2024 (the effective date), and replaced the 2010 CIL since then, except for certain key terms and conditions, which are as follows:
- Credit institutions, foreign banks’ branches, and representative offices of foreign banks can continue their operations in accordance with their respective operation licenses. However, any amendments to these licenses must comply with the provisions outlined in the 2024 CIL.
- Terms and conditions specified in ongoing contracts which were entered into before the effective date shall remain in effect until the expiration of such contracts. However, any amendment to such contracts, following the effective date, can only be made if such amendment is in line with the provisions the 2024 CIL, except for the restructuring of the repayment term of the ongoing contracts in accordance with the provisions of the SBV’s regulations.
- In the case of on-going contracts, entered into before the effective date, with an open-ended term that are not consistent with the provisions of the 2024 CIL, credit institutions or foreign banks’ branches and its customers may continue to implement such contracts until June 30, 2025. After this period, these contracts must be terminated or amended to comply with the 2024 CIL.
- Read More
EV maker VinFast commits to purchasing all output for Vietnamese suppliers
Vietnamese electric vehicle maker VinFast has committed to purchasing all products for domestic suppliers that join its production chain.
Companies - Mon, June 9, 2025 | 5:21 pm GMT+7
Phat Dat affirms leadership role in southern Vietnam's property market following successful launch of La Pura project
The official launch of the La Pura project by Phat Dat Real Estate Development Corp on Sunday in the southern province of Binh Duong made a significant impact, with over 95% of the total inventory in the Zenia sub-zone successfully transacted.
Real Estate - Mon, June 9, 2025 | 4:07 pm GMT+7
Vietnam seeks Samsung partnership in AI-integrated chip design for data centers, telecom networks
Minister of Public Security Luong Tam Quang called on South Korean tech giant Samsung to strengthen its partnership with his ministry in developing Vietnam’s security industry.
Investing - Mon, June 9, 2025 | 3:13 pm GMT+7
Vingroup partners with e-commerce platform Shopee to develop logistics infrastructure
Vietnam’s leading multi-sector conglomerate Vingroup and Shopee, the country’s top e-commerce platform, on Friday signed an MoU to develop infrastructure for e-commerce fulfillment services, enhance digital connectivity between businesses and consumers, and build a sustainable digital ecosystem.
Companies - Mon, June 9, 2025 | 11:48 am GMT+7
Finish fund Pyn Elite spends $41.4 mln on MBB shares of MBBank in May
Finish investment fund Pyn Elite allocated an additional 3% of its portfolio (VND700 billion or $41.38 million) to 26 million MBB shares of MBBank last month, increasing the holding to 12.4%.
Finance - Mon, June 9, 2025 | 11:43 am GMT+7
Fund manager Eastspring Vietnam appoints new CEO
Eastspring Vietnam, one of the largest fund managers in the country by assets under management, last Friday appointed Nguyen Quoc Dung as its new CEO and legal representative.
Finance - Mon, June 9, 2025 | 9:03 am GMT+7
U.S. Grains Council signs 5-year cooperation deal with Vietnam
The U.S. Grains Council (USGC) on Friday signed a five-year cooperation agreement with the Partnership for Sustainable Agriculture in Vietnam (PSAV), reaffirming its long-term commitment to Vietnam’s agricultural development.
Economy - Sun, June 8, 2025 | 5:13 pm GMT+7
Bamboo Capital announces senior personnel changes
Under a board of directors resolution effective last Friday, Vietnam's multi-sector conglomerate Bamboo Capital Group has a new deputy general director, while its first vice chairman Pham Minh Tuan resigned to focus on subsidiary Bamboo Energy.
Companies - Sun, June 8, 2025 | 4:05 pm GMT+7
Vietnam signs deals to import nearly $3 bln worth of US agricultural products
Vietnamese businesses accompanying Minister of Agriculture and Environment Do Duc Duy on a six-day visit to the U.S. signed multiple agreements to import nearly $3 billion worth of American agricultural products, expanding bilateral cooperation in the agricultural sector.
Economy - Sun, June 8, 2025 | 10:33 am GMT+7
EPC contract signed for O Mon IV thermal power project in southern Vietnam
An EPC contract signing ceremony for the O Mon IV thermal power project in Can Tho city took place on Friday, at the headquarters of state-owned Petrovietnam - the investor.
Energy - Sun, June 8, 2025 | 8:00 am GMT+7
Vietnam's agri major Hoang Anh Gia Lai ventures into mulberry cultivation, coffee production
After overcoming two major obstacles - debt and accumulated losses - Vietnam's agri major Hoang Anh Gia Lai JSC (HoSE: HAG) is charting a bold five-year strategic roadmap, introducing two new business segments: mulberry cultivation and coffee-tea production.
Companies - Sat, June 7, 2025 | 4:35 pm GMT+7
Stock trading accounts hit 10 mln in Vietnam
Vietnam recorded a large increase in the number of stock trading accounts in April and May, when the U.S. tariff turbulence caused strong market fluctuations.
Finance - Sat, June 7, 2025 | 3:38 pm GMT+7
Thailand’s SCG books $301 mln in Q1 sales from Vietnam
Siam Cement Group (SCG) reported sales of VND7.77 trillion ($301 million) in Vietnam in Q1/2025, reflecting the country as a key market for the Thai conglomerate in Southeast Asia.
Companies - Sat, June 7, 2025 | 9:54 am GMT+7
Vietnam’s energy firm identifies 3 emissions violations among Vietnamese enterprises
Looking ahead, 2030 is a milestone year, as major global brands such as Unilever, Nestlé, H&M, and Nike have committed to cutting Scope 1 and Scope 2 emissions by 50-65%, said Pham Dang An, CEO of Vu Phong Energy Group, a major developer of clean energy in Vietnam.
Companies - Sat, June 7, 2025 | 8:00 am GMT+7
Deal acquiring financial firm of Vietnam's SeABank invalid: Aeon Financial
Aeon Financial Service Co., Ltd. on Friday stated that its deal to purchase a financial company owned by Vietnam's SeABank is invalid due to "inappropriate accounting transactions."
Finance - Fri, June 6, 2025 | 11:57 pm GMT+7
VSAP LAB to build $69 mln chip packaging tech laboratory in central Vietnam
Vietnamese private firm VSAP LAB JSC has been approved as the investor of a VND1.8 trillion ($69.11 million) advanced packaging technology laboratory project that will assist semiconductor production in the central city of Danang.
Industries - Fri, June 6, 2025 | 8:11 pm GMT+7
- Travel
-
Indian billionaire to visit Vietnam’s Ha Long Bay with 4,500 employees
-
Vietnam in talks on visa exemptions with 15 countries to boost tourism
-
Foreign businesses in Vietnam urge relaxation of visa, work permit requirements
-
AI can be a game changer for Vietnam tourism
-
Google Doodle honors world's largest cave Son Doong
-
Vietnam allows import of Chinese aircraft under new rule