Vietnam increases strategic ownership levels in local banks

The government allows foreign strategic investors to own up to 15% of a local bank, but the ownership level for foreign bank investors remains at 10%.
In a move that doesnÆt satisfy all who want more access to Vietnam, the communist government announced on Saturday (April 21) that foreign strategic non-bank investors will be allowed to raise their stake in VietnamÆs domestic banks from 10% to 15%. However, the maximum stake that a foreign bank can own in a local bank remains capped at 10%. The decree also left unchanged the total foreign ownership ceiling of 30% in any Vietnamese bank.

Vietnam is supposed to be opening its banking sector thanks to entry into the World Trade Organisation in January û but some bankers say this latest move isnÆt quite up to speed. ôWe thought they would increase the stake for an individual investor to 20% (from the current 10%), but they didnÆt,ö says one banker doing business in Ho Chi Minh City, adding that while banks would like to see their stakes increase, "this will clearly take more timeö.

Foreign banks with stakes in Vietnamese banks include ANZ, BNP Paribas, Deutsche Bank, HSBC, Oversea-Chinese Banking Corp, Standard Chartered, and United Overseas Bank.

The decree, issued in an online statement on Saturday, says that Vietnam will permit the "stake of a strategic foreign investor to increase from 10% to 15% of the legal capital of a Vietnamese commercial bank".

It did not define who it considers a strategic investor.

The new regulation also doubles the registered capital requirement for a Vietnamese bank to 1 trillion dong ($62 million) if it wants to be qualified to sell shares to foreign investors. At the same time, it requires that foreign credit organisations have $20 billion for at least five years before they register to purchase Vietnamese bank shares.
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