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The basis for DIV to participate in the special control process
After the amended Law on Credit Institutions in 2017 was promulgated, in addition to participating in the special control process, the DIV was assigned new functions and tasks, and participated more deeply in the restructuring process of credit institutions such as: Participating in assessing the feasibility of recovery plans, plans for merger, consolidation, transfer of all shares and contributed capital; participating in the formulation of bankruptcy plans; special loans; buying long-term bonds of supporting credit institutions; exempting deposit insurance premiums.
Circular No.11/2019/TT-NHNN dated August 2, 2019 on special control for credit institutions promulgating guidelines for the Law on Credit Institutions has created a legal framework for the deposit insurer to proactively implement: appointing staff to participate in the Special control board of the insured institutions; coordinating with the Banking Supervision Agency (BSA), the State Bank of Vietnam (SBV) branches where the insured institution is headquartered, and the Special control board in the process of special control; receiving information, reporting on special control and contents related to the restructuring of credit institutions under special control.
In 2016, the General Director of Deposit Insurance of Vietnam issued a number of documents guiding the entire system on participation in special control such as: Provisional guidance No.1215/HD-BHTG dated December 9, 2016 on the participation of the deposit insurer in the special control process for the people's credit funds; Document No.415/BHTG-TPCT dated June 27, 2016 guiding the examination and determination of the payment amount and formulating a plan for insurance payment for the people’s credit funds.
In addition, in order to better implement the work on insured deposits, the DIV has issued Decision No.1092/QD-BHTG dated November 17, 2020 amending and supplementing the Provisional Guidance No.1215/HD-BHTG dated December 9, 2016; Document No.415a/BHTG-KSDB dated August 17, 2020 amending and supplementing Document No.415/BHTG-TPCT dated June 27, 2016. In response to the request at this time, the DIV has issued contents on appointing officers to join the PCF special control board, responsibilities of individuals and units in the process of joining the special control board, a number of reports on the operation situation and deposits at the specially controlled people’s credit funds to monitor and coordinate in the special control board. However, in the process of special control, there are complicated developments that need to be handled, especially in the context that DIV is more deeply involved in the process of restructuring credit institutions under special control in general and insured institutions under special control in particular, the documents above have not met the requirements.
At the end of 2021, the DIV issued the Regulation on participation in the special control process for the deposit insurer, stemming from the requirements and practice of the deposit insurer being assigned a number of new functions and tasks. Accordingly, DIV not only participates in the special control of the People's Credit Fund but with a broader scope than the insured institutions on the principle of complying with the provisions of the law on special control; consistent with the tasks and powers of the DIV; ensuring objectivity, honesty and timeliness. The regulations stipulate a number of new contents, specifically: (i) Receiving information and reporting; (ii) Criteria for staff and authority to appoint DIV staff to join the Special control board; (iii) Coordinating with the BSA, the SBV branches at provinces and cities, and the Special control board in the process of special control.
Participating in the deposit insurance process for the deposit insurer in accordance with the provisions of the law is performed synchronously and consistently throughout the deposit insurance system, from the departments at the head office to the regional deposit insurance branches.
Practical implementation of the process of participating in special control at the DIV
Regarding the content and classification of receiving information and reports: The DIV receives information and documents related to the insured institutions under special control, such as the Special control, the plan to restructure the specially controlled insured institutions, and the plan for the credit institutions to participate in restructuring the insured institutions and other relevant information, receiving from the State Bank of Vietnam (Departments under the SBV, the BSA, the branches of the SBVin provinces and cities); Special control board; the DIV is entitled to special control; other agencies and units as assigned or authorized.
For DIV regional branches: Receive and process information and documents from the SBV Branches at provinces and cities, the Special control board, the specially controlled insured institutions, other agencies and units in the locality under the management of the branch as authorization and respond in writing if necessary; Copy and send information, report to the Head Office, report to the General Director on the results of receiving and processing information (via the Participation on special control and asset recovery department).
For DIV Headquarters: The Participation on special control and asset recovery department receives and processes information and documents from the State Bank of Vietnam (except for SBV branches in provinces and cities), the Special control board, the specially controlled insured institutions, and other agencies and units in the locality managed by the Head Office as assigned or authorized; in case of necessity, copy and send information and reports related to the departments at the Head Office and the DIV branches according to their functions and tasks during the process of participating in the special control of the insured institutions before the Participation on special control and asset recovery department report to and advise the General Director on the results of receiving and processing information; Headquarters provides written response if necessary.
Regarding staff standards and authority to appoint staff of the DIV: The General General Director/Director of the regional branch appoints staff to participate in the Special control board, which is managed by the Head Office/Branch as assigned and authorized. Officers appointed to participate in the Special control board should ensure that the standards prescribed by the Law on Credit Institutions on personal relationships related to the insured institutions that are subject to special control, and at the same time ensure the requirements of the DIV on human and professional ethics, qualified to meet the job or requirements of the SBV. The DIV appoints staff to join the Special control board of insured institutions to perform the duties as assigned by the Head of the Special control board and focus on comparing and verifying deposit data and making a list of insured depositors. In particular, in the past time, DIV supported people's credit funds under special control on the category of commercial banks to participate in handling the implementation of the approved plan, reviewing and supervising the payment of deposits to depositors.
Regarding coordination with the BSA, the SBV provincial and city branches, the Special control board in the process of special control of the insured institutions: The DIV has proposed the coordination contents as well as the process of implementing the coordination content for the Head Office and regional branches of DIV, ensuring specific, clear implementation steps and handling authority in the process of coordination.
For the DIV branches: (i) Receive, process and respond to the coordination contents from the SBV provincial and city branches, the Special control board and other units related to the specially controlled insured institutions which are managed by the Special control board of the DIV branch’s management according to regulations on assignment and authorization; (ii) Report to the General Director of the DIV (via the Participation on special control and asset recovery department) on the results of handling the contents in coordination with the written response.
For the Head Office (the Participation on special control and asset recovery department): (i) Receive the coordination contents of the BSA, the Special control board and other units related to the specially controlled insured institutions, which are managed by the Head Office of DIV according to the regulations on distribution and authorization; (ii) Handle received contents: Asking for opinions and summarizing the participation of the DIV branches, relevant departments and divisions on the content of coordination (if necessary). Report to the General Director on coordination contents. Advise and submit to the General Director of DIV to sign a written response on the content of cooperation; (iii) Synthesize information on the content of coordination from the Head Office/Branch of DIV, and report to the General Director of DIV.
In fact, during the process of participating in the special control, the deposit insurer actively cooperated with the BSA, SBV branches at provinces and cities, and the special control board to handle arising situations, and provide opinions on restructuring people’s credit funds that are entitled to special control.
Some suggestions and recommendations
In the context that the process of restructuring the system of credit institutions is being strongly promoted, the SBV has assigned the DIV to perform many new tasks, including the task of participating in the governance and administration of the People's Credit Funds under special control. In addition, the Law on Credit Institutions is expected to be revised in the direction that the deposit insurer will participate more deeply in restructuring of credit institutions, implementing support measures throughout from the early intervention stage to the special control process of credit institutions. Therefore, in order to meet the requirements of the SBV as well as continue to improve the efficiency of the restructuring activities of weak credit institutions, there are some recommendations and suggestions as follows:
Firstly, continue to train and re-train on operations related to finance, banking, and special control to continuously update information, knowledge and improve qualifications and expertise, skills for the deposit insurance staff in general and the special control staff in particular in a professional and in-depth direction. At the same time, supplement and build a team of staff to ensure the capacity, qualifications and experience, and foster necessary skills such as management work, the ability to dialogue... to meet the requirements of new task. set by the SBV.
Secondly, improve the financial capacity of the deposit insurer to ensure sufficient and ready resources for the implementation of measures to support and reimburse depositors at specially controlled institutions so that their legitimate rights and interests are guaranteed, while ensuring the principle of capital preservation and development in the management and use of capital.
Thirdly, the DIV may share and gain deeper access to special control-related information from the SBV, the SBV provincial and city branches, the Special control board as well as from other units, agencies and local authorities where there is a credit institution that is subject to special control. From there, the DIV can promptly capture information, monitor and closely evaluate the operation of the credit institutions under special control; proactively prepare for arising situations according to their functions and tasks and support the SBV in the process of handling and restructuring weak credit institutions.
Fourthly, the DIV synchronously applies a modern information technology system, perfects the information technology management mechanism, and enhances system security and safety in order to optimize the operational efficiency.
