Deputy chairman of the National Financial Supervisory Committee Le Xuan Nghia has affirmed that there will be no mass sale of banking shares to foreign investors.
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Nghia made the affirmation following the Prime Minister’s request to the State Bank to consider allowing commercial banks to sell up to 20 per cent of their charter capital to foreign strategic investors.
The move shows that the government has given a green light to increase foreign ownership at commercial banks from the current rate of 15 per cent and investors expect that will create a positive change in the gloomy banking stock market.
The cooperation between foreign investors and Vietnam’s banks has opened new developments. Foreign partners have helped the banks build competitive financial services and products, and increase human resources and technology capacity. In return, foreign partners have earned profits and gained a large market share from investing in the banks.
The equitisation of Vietinbank has been successful thanks to selling a portion of its shares to the International Finance Corporation (IFC) and the Nova Scotia Bank of Canada in 2010.
The Vietnam International Bank (VIB) plans to raise the ownership of the Commonwealth of Australia at the bank from a current rate of 15 per cent to 20 per cent by the end of the year.
Mekong Housing Bank said it has reached a deal to sell 20 per cent of its stake to its foreign strategic partner, to triple its charter capital to VND3 trillion.
Since a number of banks operate without a long-term development strategy only want their foreign strategic partners to contribute capital and not become involved in their operation, Nghia said this has resulted in capital withdrawal of foreign banking and financial organisations from the banking sector.
Effective cooperation with foreign partners depends much on the behaviour and capability of domestic banks, he noted.
However, the development of Vietnam’s banking sector, particularly after the global economic crisis, is highly appreciated by foreign investors.
The VinaCapital Fund report on foreign partners’ investment in 2010 said that finance-banking remains a sector that received special attention in the country despite regulations to restrict foreign investment in the field.