New banking decree fails to up foreign ownership

January 13, 2014 | 10:22

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A new decree announces no change to the combined stake foreign investors can hold in a Vietnamese bank and no clear rules on foreign ownership hikes for weak banks.

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On January 3 the government released a new decree replacing a previous version from 2007 on foreign investors’ shareholdings in Vietnamese banks.

Surprisingly, there has been no change to the combined stake foreign investors and those related to them can hold in a local financial institution, a 30 per cent maximum.

However strategic investors, who formerly could only hold 15 per cent, can now hold 20 per cent under the new decree.

While the government appears to be blocking the involvement of foreign companies, most banks were hoping for a revision to the law that raised the ownership cap to 49 per cent.

They were also hoping that foreign ownership increases could be decided on a case-by-case basis by the prime minister to support weak banks.

While the new law, as with the old, does have conditions for the prime minister to decide to up the ownership cap, this may mean that only weak banks will be extended this privilege and the law did not include any specific numbers on how high the cap could be raised.

The decree will take effect from February 20.

By By Nguyen Trang

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