The State Bank of Vietnam, the country’s central bank, has turned down a proposal by many investors who seek a higher foreign ownership rate in domestic banks and decided to maintain the cap of 30 per cent for the time being.
The viewpoint is confirmed in a decree regulating foreign investors to buy shares in Vietnam’s commercial banks, which has been submitted to the Government last week.
Under the decree, only foreign banks, financial groups, investment fund management companies, and other foreign credit institutions can buy stake in Vietnamese commercial banks.
They can buy a maximum of 30 per cent stake, of which a strategic investor can buy 20 per cent at most, a fund manager 5 per cent, while others 10 per cent.
Total room for them is also unchanged when a bank is listed. In this case, if a foreign investor buys more than 20 per cent stake, they must require approval from the State Bank’s governor.
The decree, if approved, would dump sentiment of foreign investors, who expects to acquire more bank shares and further penetrate into Vietnam’s banking market.
Recently, the Vietnam Association of Foreign Investors (Vafi) has proposed the Prime Minister to raise the foreign ownership ratio in local banks to 49 per cent, in which strategic investors could hold up to a 30 per cent stake.
Vafi said that the larger space for foreigners would help attract as well as select strategic investors.
In addition, bank shares would have higher liquidity while local lenders have opportunities to raise registered capital and narrow the gap with the regional and global banks in terms of capital, technology, and management capability.
With foreigners holding a 49 per cent stake, there is very small risk of acquisition of local banks, Vafi said.
VnExpress
Vietnamese
