With an 88 per cent vote of approval, the amendment of the Law on Credit Institutions was approved by the National Assembly on November 20, 2017. This law will come into force on January 15, 2018.
Besides adding plans to restructure the credit institutions under special control, the Law also added provisions on the cases that do not allow bank leaders to chair more than one bank.
Specifically, under Clause 4, Article 34 of the amendment, the chairperson of the Board of Directors, the chairperson of the Members' Council are not allowed to hold the same position in another enterprise.
In addition, the deputy general director and equivalent positions of the credit institutions are not allowed to play the same role in another enterprise.
Previously, the Law on Credit Institutions 2010 stipulates that a member of the Board of Directors and member of the Members' Council of a credit institution were not allowed to be the manager of another credit institution, except that the later is a subsidiary or a member of the Control Board of the former.
The head of the Control Board of the credit institution was not allowed to be a member of the Control Board or a manager of another credit institution.
The deputy general director and equivalent positions of the credit institution were not allowed to play the same role in another enterprise unless it was a subsidiary of the credit institution.
Under the new regulations, many bank leaders such as Do Minh Phu, chairman of Tien Phong Commercial Joint Stock Bank (TPBank) and DOJI Gold & Gems Group; Nguyen Thi Nga, chairwoman of Seabank and BRG Group; Do Quang Hien, chairman of Saigon-Hanoi Commercial Joint Stock Bank(SHB) and T&T Group and Vu Van Tien, chairman of An Binh Commercial Joint Stock Bank (ABBANK) and Geleximco Group will have to choose whether to resign from the bank or the business they are leading.
According to a report of the National Assembly Economic Committee, there is an opinion saying that the provisions of the Law are too strict and greatly affect the management and control of other credit institutions and enterprises.
However, the current regulations allowing leaders of the banks to hold the same position in other enterprises has posed detrimental impacts on the operations and security of the banking system.
According to the report of the National Assembly’s Economic Committee, the provisions of the Law aim at the transparency and of the credit and production activities, avoiding potential risks.
However, there will be a transitional period whereby the titles are still held by the manager of another company, if any, until the end of the current term, without disturbing the activities of credit institutions.
