Vietnam: VIFC Opens Bank Licensing Window

In brief

Bank licensing in the Vietnam International Financial Center (VIFC) is now moving into practice. Decree No. 329/2025/ND-CP dated 18 December 2025 on licensing and operation of banks, foreign exchange management and AML/CFT in the VIFC (“Decree No. 329”) sets the licensing conditions and leaves the application file and procedure to the VIFC Executive Authority. With these in place, the legal framework is ready for banks to prepare and file their applications.

In brief, foreign and domestic banks can now apply for a VIFC subsidiary, and foreign banks can also apply for a VIFC branch. VIFC banks operate under their own rulebook, which borrows several parts of onshore banking law and replaces others.

In this client alert, we set out what matters most for bank owners and establishment teams.

Key takeaways

• Check the owner tests first: Foreign parent banks need an AA- credit rating and at least USD 10–20 billion in total assets. Domestic owners need a State Bank of Vietnam (SBV) rating of A or B and must be a large bank.
• Don’t assume onshore rules apply: VIFC banks follow their own rules on licensing, credit limits, governance and supervision, and onshore banking law applies only where those rules borrow it.
• Get the home regulator involved early: For foreign applicants, the home regulator’s letter usually take the most time.
• Build the business plan around offshore clients: A VIFC bank works mainly in foreign currency and cannot take deposits from onshore clients that are not VIFC members.
• Plan the exit as carefully as the entry: The SBV will not provide refinancing or other central bank support, the owner or parent is responsible for any capital shortfall, and some protection for activities already approved survives the VIFC review planned after five years.
  
  

In more detail

Three routes, one presence

A parent bank may set up in the VIFC in one of three forms: (i) a single-member limited liability bank wholly owned by a Vietnamese commercial bank (“Domestic Subsidiary”), (ii) a single-member limited liability bank wholly owned by a foreign bank (“Foreign Subsidiary”), or (iii) a branch of a foreign bank (“VIFC Branch”) (together, “VIFC Banks”).

Each bank may hold only one VIFC presence, and a VIFC Bank cannot open further offices or move outside the VIFC. The Executive Authority issues a single license, which also serves as the certificate of membership of the VIFC (each holder, a “Member”) and may run for up to 99 years.

Who can apply

The parent banks must meet, among others, the following tests:

The AA- rating requirement is usually the first thing foreign groups need to check. It rules out several regional banks that are otherwise active in Vietnam. All applicants also need a viable business plan, a compliant charter and suitably qualified managers, and the activities proposed for the VIFC Bank must be ones the owner or parent already carries on at home.

Which rules apply

VIFC Banks are not simply onshore banks in a new location. The VIFC framework takes priority over other Vietnamese laws, and the VIFC banking rules set their own requirements for licensing, corporate structure and fit-and-proper standards, permitted activities, prudential limits, foreign exchange, reporting, supervision and exit. The Law on Credit Institutions (“LCI”) applies only where those rules expressly borrow it.

In practice, this covers the basic conduct-of-business rules: banking terms and product definitions, commercial customs such as business autonomy and prohibited acts, confidentiality, data security and business continuity, electronic transactions, the keeping of credit files and most customer-protection duties. The LCI also sets the duties of the board, supervisory board and General Director, and the cap on fixed assets when a bank owns its premises. SBV regulations referred to in the VIFC rules, such as those on capital adequacy, also apply, but not their reporting or licensing provisions. Where none of these rules covers an issue, general Vietnamese law fills the gap.

The difference shows up in practice. Licensing is decided within 120 days rather than the 180 days that apply onshore, the supervisory board needs three members rather than five, deposits are not covered by deposit insurance, and banks outside IFRS groups face a flat credit limit of 10% of own capital per client and 15% per client and its related persons, while onshore banks are still phasing down to those levels.

A two-stage, 120-day licensing process

The Executive Authority must grant or refuse a license within 120 days of receiving a complete application dossier. The review to run in two stages:

• The Executive Authority would first check the file and consult the SBV, the Ministry of Public Security and, for foreign applicants, the home regulator, before either giving in-principle approval to the setup or rejecting the application; and
• An advisory council of experts would then appraise the business plan and interview the proposed managers before the license is issued.

For foreign applicants, the home regulator’s confirmation of the parent’s permitted activities, compliance record and capital position, together with the supervisory cooperation agreement, will likely decide the timetable. Once licensed, the parent bank must deposit its full charter capital in a blocked account at the SBV at least 30 days before opening, announce its opening publicly and open within 12 months, failing which the license lapses. Early preparation of the owner documents makes the biggest difference to the timetable.

An offshore, foreign-currency business model

VIFC Banks work in foreign currency, apart from a few activities such as trading Vietnamese bonds. Offshore clients, Members and other VIFC Banks can receive the full range of services, including deposits, lending, payments, trade finance, and foreign currency and derivatives services, although foreign currency trades must be between two foreign currencies and derivatives may not involve VND.

Onshore, VIFC Banks may lend to, guarantee and provide trade finance for Vietnamese companies and credit institutions, but they cannot take deposits from, or open accounts for, onshore clients that are not Members. Onshore borrowers must meet their own conditions, including a minimum loan term of 12 months, and Domestic Subsidiaries face extra limits on lending offshore and on holding foreign-currency bonds issued abroad.

Banking services are a VIFC prioritized business. Qualifying new projects may receive a 10% corporate income tax rate for 30 years, together with tax exemptions and reductions, although how a VIFC Bank qualifies still depends on further tax guidance.

Prudential rules, but no SBV safety net

If a Foreign Subsidiary’s owner or a VIFC Branch’s parent reports under IFRS, the VIFC Bank may follow the parent’s policies on credit limits, asset classification and prudential ratios, which must at least include capital adequacy, leverage ratio (LEV), liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). Domestic Subsidiaries and banks whose parents do not report under IFRS follow the VIFC limits, with liquidity ratios measured in USD rather than VND. All VIFC Banks are exempt from the foreign currency position limit and from deposit insurance.

The other side of this flexibility is that the SBV will not provide refinancing, special lending, early intervention or special control. If real charter capital falls below the minimum, or the bank hits a defined crisis trigger, the owner or parent has six months to fix it, failing which the VIFC Bank must be dissolved. The owner or parent must also approve a recovery plan within one year of licensing and update it at least every two years.

Governance and people

Domestic Subsidiaries and Foreign Subsidiaries need a Members’ Council of at least five members with Risk and Human Resources committees, a supervisory board of at least three members and a General Director. The General Director, the Head of the Supervisory Board and the legal representative must live in Vietnam, and the Executive Authority must approve nominees for these positions before they are appointed. Nominees with no previous work history in Vietnam are exempt from some of the disqualification and professional-ethics checks, which makes it easier to bring in experienced managers from the group.

A VIFC Branch needs only the Executive Authority’s approval of its General Director.

Exit and regulatory continuity

A VIFC Bank’s presence ends if its term expires without being extended, if it chooses to dissolve (which it may do only if it can pay its debts and the Executive Authority approves), if its license is revoked (for example, for fraud in the application, operating outside the license or serious breaches of prudential rules), or if it cannot fix a capital shortfall or crisis within the six-month support period. A VIFC Branch also loses its license if its parent is dissolved or bankrupt, or if the home regulator revokes or suspends the parent’s license. A VIFC Bank loses its Member status, and with it the VIFC incentives, only when its license is revoked, after which it is subject to general Vietnamese law.

Closure is handled by the VIFC authorities rather than the SBV. Assets are liquidated under the Executive Authority’s supervision, an insolvent subsidiary must file for bankruptcy, and the parent bank must cover any shortfall of a VIFC Branch. Foreign investors repatriate their capital and profits through their foreign currency capital account.

Investors may reasonably ask what happens to the VIFC framework over time. The Government must review it after five years and report to the National Assembly, proposing a VIFC law, by 30 March 2034. The VIFC Executive Board may also propose restructuring the VIFC within five years, provided operations in the two cities are not disrupted. Importantly, activities approved, and incentives granted, under the current framework continue until those activities end, even if the framework itself expires. Separately, in exceptional cases affecting national financial security, the SBV keeps the power to suspend a VIFC Bank’s activities or restrict who it deals with and in which currencies. Investors should therefore make sure the license scope and incentives are clearly documented from the start.

Looking ahead

The legal basis for all three routes is now in place. For bank owners, the question is no longer whether they can apply, but whether they meet the owner tests and can make the business case work under the VIFC rules.

If you are considering a VIFC subsidiary or branch, our team can help you check eligibility, choose the right structure and prepare your application file. Please contact us below.

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