Loss-making bank branches could be forced to shut down

Loss-making bank branches could be forced to shut down

Loss-making bank branches in Việt Nam could face closure from July 1 under new SBV rules aimed at boosting efficiency, strengthening oversight and streamlining procedures.

Bank branches in Việt Nam which incur loss for three consecutive years could be forced to shut down from July 1. — VNA/VNS Photo

Loss-making bank branches could face mandatory closure from July 1 under new regulations issued by the State Bank of Việt Nam (SBV), as the central bank moves to improve operational efficiency and strengthen oversight across the banking system.

Under Circular No. 11/2026/TT-NHNN, issued on May 19 and taking effect on July 1, domestic commercial bank branches that record negative income-expenditure balances for three consecutive years may be required to cease operations.

The requirement does not apply to branches operating in rural areas or to newly established branches during their first three years of operation.

The move is intended to improve the operational efficiency of the banking system and encourage lenders to review and restructure underperforming units.

The new rule forms part of broader amendments to regulations governing commercial banks’ branch networks and is aimed at prompting lenders to reassess and restructure underperforming business units persistently.

Under the circular, regional branches of the SBV will be responsible for reviewing and assessing branch performance and may request or require commercial banks to initiate closure procedures for branches and transaction offices that fall within the prescribed cases.

Within 10 working days of receiving a proposal from a regional SBV branch, or upon identifying a violation, the SBV’s Department of Credit Institution Management and Supervision must review the case and either submit it to the SBV Governor for consideration or issue a formal request requiring the bank to terminate the operation of the relevant branch or transaction office.

Commercial banks will then have up to 90 days to complete all necessary procedures after receiving the regulator’s request.

The circular also expands the list of violations that could result in the closure of a branch or transaction office, including providing inaccurate information in licensing applications, operating outside the scope of licensed activities or relocating business premises without prior written approval from the SBV.

In addition, the circular introduces a series of administrative reforms designed to simplify procedures and shorten processing times in the banking sector.

Notably, the time required for the SBV to review applications from foreign investors seeking to acquire shares in Vietnamese credit institutions has been reduced to 19 working days.

The processing time for applications related to overseas stock listings by Vietnamese banks has also been shortened to 14 working days.

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