Tightening banking manipulation: Owners of 1% of capital must disclose to 5 generations of family members

Specifically, the Law on Credit Institutions (amended), recently passed by the National Assembly , stipulates that shareholders owning 1% or more of the charter capital of a credit institution (CI) must provide the CI with information of individuals and related persons, including: Full name; personal identification number; nationality, passport number, date of issue, place of issue of shareholders who are foreigners; number of the Certificate of Business Registration or equivalent legal documents of shareholders who are organizations; date of issue, place of issue of this document.

In addition, shareholders owning 1% or more of the charter capital must also provide information on the quantity and percentage of shares they own and those of related persons at that credit institution.

Shareholders owning 1% or more of charter capital must send the credit institution a written notice providing information for the first time and when there is a change in this information within 7 working days from the date of occurrence or change of information.

Regarding ownership ratio, shareholders owning more than 1% of charter capital only have to disclose information when there is a change in their share ownership ratio, their share ownership ratio and that of related persons from 1% of charter capital or more compared to the previous provision.

The new law also requires credit institutions to publicly disclose information about the full names of individuals and organizations that are shareholders owning 1% or more of the credit institution's charter capital and the number and percentage of shares owned by that individual and related persons on the credit institution's website within 7 working days from the date of receiving the information provided.

Under the new regulations, the concept of "related persons" has been extended to include paternal grandparents, maternal grandparents, aunts, uncles, nephews, nieces and nephews, that is, five generations. This is a necessary measure to control cross-ownership.

The Law on Credit Institutions (amended) also stipulates a roadmap for tightening credit granting ratios for customers in Clause 1, Article 136 as follows:

The total outstanding credit balance for a customer and related persons of that customer of a commercial bank, cooperative bank, foreign bank branch, people's credit fund, or microfinance institution must not exceed the following ratio:

From the effective date of this Law (January 1, 2025) to before January 1, 2026: 14% of equity capital for a customer; 23% of equity capital for a customer and related persons of that customer;

From January 1, 2026 to before January 1, 2027: 13% equity for a customer; 21% equity for a customer and related persons of that customer;

From January 1, 2027 to before January 1, 2028: 12% equity for a customer; 19% equity for a customer and related persons of that customer;

From January 1, 2028 to before January 1, 2029: 11% equity for a customer; 17% equity for a customer and related persons of that customer;

From January 1, 2029: 10% equity for a customer; 15% equity for a customer and related persons of that customer.

Previously, the Law on Credit Institutions stipulated: The total outstanding credit balance for a customer must not exceed 15% of the equity capital of a commercial bank, foreign bank branch, people's credit fund, or microfinance institution; the total outstanding credit balance for a customer and related persons must not exceed 25% of the equity capital of a commercial bank, foreign bank branch, people's credit fund, or microfinance institution.

Thus, the maximum credit/equity ratio for a customer at the bank will gradually decrease from 15% to 10% in 5 years (until 2029). The maximum credit/equity ratio for a customer and related persons will gradually decrease from 25% to 15% in 5 years (until 2029).

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