Credit Consolidation on

As of 11 February 2010, the State Bank of Vietnam ("SBC") published Financial Services Supervision Code No. 04/2010/TT-NHNNN, which regulates the mergers, consolidation and acquisitions of credit entities ("Circular 04"). Credit institute is a financial institute, a financing society, a financial lease or a credit cooperative. Consolidation means that two or more credit entities merge to form a new credit entity; and acquisitions means that one credit entity buys another credit entity.

Newsletter 04 opens the doors for M&A transactions in the finance industry and supersedes an old newsletter from 1998, which only applies to bank M&A, consolidation and purchase. Rundschreiben 04 enables all kinds of credit institution to merge, consolidate and acquire, provided that a clear blueprint exists and competition law is upheld.

However, it is also applicable to fully foreign-owned approved Vietnamese financial intermediaries and allows them to combine, consolidation and acquisitions with other credit entities. Rundschreiben 04 governs the amalgamation, consolidation and purchase by the following credit institutes domiciled and active in Vietnam: Cooperative credit institutes. Mergers or consolidations of cooperative credit institutes must conform to the ordinances of Decision No. 24/2006/QD-NHNN of the Governor of SBC of 6 June 2006 on the granting and revocation of authorisations for the creation and running of public credit investment trusts, on the opening and closing of the operations of transactions divisions, branch establishments, representatives, trading centres and outlets of public credit investment trusts, on the segregation, splitting, consolidation and fusion of public credit investment trusts and on the winding-up of public credit investment trusts under the control of SBC.

The planned merging or consolidation of credit institutes or the purchase of credit institutes requires the approval of the President of SBC. A credit entity involved in a concentration or consolidation of credit entities or in an acquisitions of a credit entity must, in accordance with applicable legislation, agree between the involved entities on the solution of those legal issues.

A credit institution involved in a concentration or consolidation of credit entities or in an acquisition of a credit entity shall be required to avoid adversely affecting the customer or customer interests, in particular the depositor or customer interests, of any credit entity involved in such concentration, consolidation or takeover.

The members of the executive and supervisory boards, the general manager and the bodies and persons associated with a credit institutions involved in a concentration, consolidation or takeover shall be in charge of protecting the confidential nature of the information so that that credit institutions can function in a stable manner before the adoption of the concentration, consolidation or takeover proposal by the decision-maker of the credit institutions.

In carrying out the processes for the particular mergers or consolidation of credit entities or the acquisitions of credit entities, the directors of the credit entity shall be accountable for providing, without delay, full, consistent, true and fair information on the processes of such mergers, consolidation or acquisitions, as well as information on the credit entity's overall economic, organizational and operating situation, without prejudice to the ownership of the persons involved in such mergers, consolidation or acquisitions or other approved entities.

Files, information and advertising from credit entities involved in a concentration, consolidation or takeover must conform to the principles that such information is fair, correct and not misleading. Basic principles for deciding on a concentration, consolidation or acquisition: Where a credit entity participates in a concentration, consolidation or takeover, the policy maker of that concentration, consolidation or takeover shall take a final determination on that concentration, consolidation or takeover in accordance with the terms and procedure for holding any meeting or vote under applicable laws.

Consolidated credit institutions will agree on matters of relevance to the organization of consolidation and on the terms and methods for organizing and coordinating meeting and votes in order to take the appropriate decisions and will specify them in the consolidation schedule and in accordance with applicable laws. Form of fusion:

The merger of a banking entity, a financing entity and/or a cooperative credit entity with a banking entity is possible. One financing entity may be merged with another financing entity. One financial lease entity may be merged with another financial lease entity. Types of consolidation: Banks may join forces with banks, financing companies and/or cooperative credit institutions to form banks.

Financial firms can merge to form a single financing group. Financial lease contractors may merge to form a single financial lease contract. Types of acquisition: Banks may purchase financing vehicles and/or financial leases. A financing vehicle may purchase another financial vehicle. One of the chapters of Rundschreiben 04 is devoted to the definition of special responsibility of credit institutes, SBC branch offices of the federal states, financial accounting, the legal department and other related units and units of SBC.

This circular enters into force 45 working days after its publication and supersedes Decree No 241/1998/QD-NHNN5 of the Governor of SBC of 15 July 1998, which contains provisions on the mergers, consolidation and acquisitions of shares in Viet Nam credit institutes. Where a holding acquired by a credit institutions which are in the process of being merged or a holding acquired by a credit institute has a duration of less than five years, any shareholder who was involved in setting up the credit institute shall transfer shares in accordance with the Act on the Granting of Branch and Operating Permits for Participating Credit Institutions. 3.

Where a credit institutions involved in a concentration, consolidation or purchase is a stock corporation, it must, in accordance with the requirements of this Circular, observe the applicable requirements of the German Act on the Combination, Consolidation and Purchase of Credit Institutions.