Bank bosses banned from accepting brokerage commissions

Specifically, Circular No. 16/2018 guiding a number of articles related to the financial regime for credit institutions and foreign bank branches (FCs) stipulates a number of expenditures.

Specifically, brokerage commissions paid to third parties (intermediaries) are not applicable to agents of credit institutions and foreign bank branches; management positions, employees of credit institutions and foreign bank branches and related persons of credit institutions and foreign bank branches according to the provisions of the Law on Credit Institutions and its amendments, supplements and replacements.

The payment of brokerage commissions must be based on a contract or confirmation between the credit institution, foreign bank branch and the commission recipient, which must include the following basic contents: name of the commission recipient; content of payment; payment level; payment method; implementation and completion time; responsibilities of the parties.

For brokerage expenses for leasing assets (including foreclosed and debt-assigned assets): the brokerage expense for leasing each asset of a credit institution or foreign bank branch must not exceed 5% of the total amount of revenue from leasing that asset brought in by brokerage during the year.

For brokerage expenses for selling mortgaged and pledged assets: the brokerage commission for selling each mortgaged or pledged asset of a credit institution or foreign bank branch shall not exceed 1% of the actual value obtained from the sale of that asset through brokerage.

In order for commission payments to be applied publicly and consistently, the Circular requires the Board of Directors or Board of Members or General Director (Director) of credit institutions and foreign bank branches to issue regulations on brokerage commission payments.

For real estate that credit institutions temporarily hold for sale or transfer to recover capital within 03 years, credit institutions do not record an increase in assets or depreciate.

For real estate acquired by credit institutions to directly serve business activities, credit institutions shall account for increased assets, depreciate according to the provisions of law and must ensure the investment limit for purchasing fixed assets according to the provisions of Clause 3 and Clause 4, Article 6 of Decree No. 93/2017/ND-CP.

Credit institutions and foreign bank branches must ensure that they maintain investment limits and purchase fixed assets directly serving business operations according to the principle that the remaining value of fixed assets does not exceed 50% of the charter capital and the reserve fund for supplementing charter capital recorded in the accounting books for credit institutions; does not exceed 50% of the allocated capital and the reserve fund for supplementing capital recorded in the accounting books for foreign bank branches.