Banks await lift in foreign ownership

A foreign investor is allowed to own a 20 per cent stake in a bank, while the total non-Vietnamese ownership is capped at 30 per cent. There is talk that the Government plans to hike the latter to 49 per cent, and bankers are eagerly awaiting the change.

Pham Huu Phu, chairman of Sacombank, said his bank has made plans to sell a 20 per cent to foreign investors, but would sell more if the foreign cap is increased to 49 per cent as rumoured.

If the cap is indeed increased, banks should take advantage to attract foreign investment in the financial and banking sector, he said.

The industry would surely improve when foreign investors bring money and management skills, he said.

The chairman of another bank, who declined to be named, said the Government should raise the ownership cap for an individual foreign investor to 30 per cent and the cumulative limit to 49 per cent, which is the limit for all other sectors.

The Vietnamese financial-banking sector is still in a fledgling state, and so their management and financial capacity remain modest, he admitted.

But with the market being in a very difficult situation, the time is ripe for its comprehensive restructuring, he said.

The resources enlarged by further raising the foreign ownership could be used to bolster banks' financial and managerial capacity, he said.

Vu Van Tien, director of ABBank, said his bank as already sold a 30 per cent stake to foreigners as ordered by the Government, but, if the cap is hiked, would sell more shares to foreign investors, especially its strategic partner, the World Bank's IFC.

Banking industry insiders said many banks have sold 10-20 per cent stakes to foreign investors and get significant support from the latter.

For instance, Eximbank sold 15 per cent to the Sumitomo Mitsui banking Corporation, and has, with the Japanese bank's support, introduced many new financial products while consolidating its position as one of the country's leading banks in the last five years, according to its chairman, Le Hung Dung.

In 2007 it had a prescribed capital of only VND2.8 trillion ($127.27 million) and assets of VND 33 trillion ($1.5 billion); by late last year they had risen to VND12.36 trillion ($561.818 million) and VND170 trillion ($7.72 billion) respectively, he said.

Other lenders such as OCB, VPBank, and Techcombank have also benefited from their foreign shareholders.

A deputy director of a foreign bank in HCM City said increasing the foreign ownership cap in banks is important for attracting foreign funds into the financial-banking sector.

But the Government should consider increasing the limit for all banks instead of only for weak banks.

In any case, hiking the foreign ownership limit for small and weak banks to help them restructure may not be of too much help since they would not be too attractive for foreign investors, he pointed out.