A representative office is the lightest presence of a foreign bank in Vietnam — and the most misunderstood: it is not a miniature branch. Under the Law on Credit Institutions 32/2024/QH15, a representative office performs liaison and research functions only, and absolutely no banking business.
Legal basis
- Law on Credit Institutions 32/2024/QH15: a representative office of a foreign credit institution is a dependent unit performing liaison office, market research and investment project promotion functions; it may not conduct business activities in Vietnam.
- Decree 88/2019/ND-CP: sanctions in the monetary and banking sector for out-of-scope activity of foreign credit institutions in Vietnam.
What may a foreign bank representative office do, and what may it not do?
Permitted acts: serve as the liaison point between the parent bank and customers and authorities in Vietnam; research the market and gather economic and financial information for the parent bank investment decisions; promote and introduce the parent bank investment projects and cooperation programmes; monitor performance of agreements the parent bank signed with Vietnamese partners; and provide administrative support to parent bank working delegations. Prohibited acts: no banking business of any kind — no deposit taking, no credit granting, no payment accounts for customers, no guarantees; no signing economic contracts in its own name as a business entity; no service fees charged to customers in Vietnam; and no use of the representative office name to market banking products like a transaction point. The boundary most often blurs in client care activity: the office may meet, introduce and forward files to the parent bank for decision, but commitments on loan conditions, interest rates and limits bind only when the parent bank (or its licensed Vietnamese branch, if any) signs within its own authority.
Can it sign credit contracts? How long may it operate?
No — signing a credit contract is credit granting, a banking business activity prohibited for a representative office. Credit contracts with Vietnamese customers must be signed by the parent bank directly under the cross-border lending mechanism, or by the foreign bank branch in Vietnam if the bank has opened a licensed branch. On term: the representative office establishment licence is granted for a defined term (commonly 5 years) and renewable where the office operates within scope and fully performs its reporting duties to the State Bank. When the parent bank upgrades its presence to a branch or a wholly foreign-owned bank, the representative office typically terminates or converts under the parent organisational decision, with notification to the State Bank.
What if the office exceeds its scope?
Out-of-scope activity is handled on two layers: the administrative layer — fines under Decree 88/2019/ND-CP for conducting business activities without permission, with an order to cease the out-of-scope activity; and the licence layer — the State Bank may consider revoking the representative office establishment licence for serious or repeated breaches, and the violation record directly affects any later presence-upgrade plans of the parent bank in Vietnam. This is why foreign banks run representative offices under strict discipline: staff make no commercial commitments, introduction materials state clearly that the office conducts no banking transactions, and every client lead is recorded as forwarded to the parent bank for handling.
Frequently asked questions
What can and cannot a foreign bank representative office do?
It may: liaise, research the market, promote the parent bank investment projects and monitor signed agreements. It may not: conduct any banking business — deposits, credit, accounts, guarantees or service fees from customers in Vietnam, under the Law on Credit Institutions 32/2024.
Can it sign credit contracts?
No. Signing a credit contract is credit granting, prohibited for a representative office. Contracts must be signed by the parent bank under the cross-border mechanism or by a licensed foreign bank branch in Vietnam.
How long is its operating term?
As stated in the representative office establishment licence (commonly 5 years), renewable where the office operates within scope and fully performs its reporting duties to the State Bank.
What is the penalty for exceeding its scope?
Administrative fines under Decree 88/2019/ND-CP for unpermitted business activity, an order to cease the out-of-scope part; serious or repeated breaches may lead to revocation of the establishment licence and prejudice the parent bank presence-upgrade plans.
This article has been quality-reviewed by the FLAW AI Legal Council