Half of Vietnamese private banks have 15% foreign ownership or less

By Tuong Thuy
Sun, April 3, 2022 | 2:07 pm GMT+7
A client (R) served by a Techcombank staff member. Photo courtesy of the bank.

A client (R) served by a Techcombank staff member. Photo courtesy of the bank.

While foreign ownership in some Vietnamese private banks has hit the regulated cap of 30%, others still have a lot of room for foreign investors to get in.

Data from the Securities Depository Center shows that about half of the 31 Vietnamese joint stock banks have foreign ownership exceeding 15%.

Of these, seven banks already hit the cap or near it, namely ACB, MB, MSB, VIB, OCB, Techcombank and TPBank. These lenders have high profit growth rates and profitability.

Others have locked their foreign ownership levels lower, including MB (23.23%), Techcombank (22.47%), OCB (22%), and VIB (20.5%), respectively.

Foreign investors have high interest in buying into these banks as typically seen in the case of VPBank. On March 4, when VPBank raised its foreign ownership limit to 17.5% from 15%, foreign investors recorded net buying of more than 23 million shares, pushing the stock’s price up sharply.

On the contrary, several Vietnamese banks have very low or zero foreign ownership ratios such as VietCapital Bank, Kien Long Bank, Lien Viet Post Bank, SHB, SeABank, Bac A Bank, Viet A Bank, and VietBank.

Some of them lock the cap at low levels in order to offer stakes to future strategic partners, while others do so to minimize foreign investors’ influence on their share prices and shareholder structure.

SeABank, Lien Viet Post Bank and VietCapital Bank keep the cap at 5% of their chartered capital, while the figure at PB Bank is 2%.

According the government’s Decree No.01/2014/ND-CP on foreign investors’ purchase of Vietnamese credit institution shares, the foreign ownership ratio must not exceed 5% of the charter capital for an individual and 15% for an institution. The aggregate foreign ownership is capped at 30%.

Generally, banking experts are of the view that foreign investors’ participation in the local banking system in the past years has created positive changes in finance, technology, and governance, bringing Vietnamese banks closer to international practices and standards.

Can Van Luc, chief economist at BIDV bank, said the foreign ownership limit should be lifted as soon as possible as Vietnamese banks have great demand for equity hikes to meet Basel II and Basel III requirements, especially as their capital adequacy ratio (CAR) is lower than regional peers.

Nguyen Quoc Hung, General Secretary of the Vietnam Bankers Association (VNBA), noted that a higher cap will attract more capital from foreign investors, help commercial banks increase their capital, improve financial capacity and competitiveness, and better deal with bad debt.

But he argues that the ownership limit for different groups of banks should be different, depending on the State Bank of Vietnam’s classification. Those creditors that already fulfill Basel II requirements and strive to meet Basel III rules should see the foreign ownership level higher than 30%.

The government’s Resolution 22/NQ-CP dated July 2, 2021 requires the state ownership at banks where the state currently holds the majority stake like Vietcombank, Vietinbank and BIDV to be at least 65% of the total shares with voting rights in the period 2021-2025.

Brokerage house Viet Capital Securities (VCSC) said they do not expect any hike in the foreign ownership cap at these banks in the short term. Instead, VCSC reckons a few private banks would likely be allowed to lift up their own caps.

Under the EU-Vietnam Free Trade Agreement (EVFTA), within 5 years from the effective date of August 1, 2020, Vietnam commits to allow two European financial organisations to own up to a 49% stake in two Vietnamese banks, not applicable to the nation’s Big 4 - BIDV, Vietinbank, Vietcombank and Agribank, where the state is the majority shareholder.

VCSC noted that the clearest candidate for this commitment is Sacombank. The reason is currently 32.5% of the private bank’s existing shares are being held as collateral for an unpaid debt that has been transferred to the state-owned Vietnam Asset Management Company (VAMC).

VCSC said selling all of those shares one time would bring in the highest value to VAMC, and because the shares exceed the current 30% cap, such selling must be a special case. It might serve that EVFTA commitment.

VCSC does not see CB Bank, GP Bank and Ocean Bank as clear candidates. The central bank previously acquired those extremely weak banks at zero Vietnamese dong. Under the State Bank’s Circular 38/2014/NHNN, foreign investors can buy a more than 30% stake of these banks given government approval, but there are yet to be any buyers since then.

Comments (0)
  • Read More
Mega Long Thanh airport first phase should be completed in Sept 2026: senior parliament official

Mega Long Thanh airport first phase should be completed in Sept 2026: senior parliament official

Relevant agencies should prepare to complete the first phase of the $14-billion Long Thanh International Airport project on September 2, 2026, as soon as the Vietnamese National Assembly approves changes to the project, said a senior parliament member.

Infrastructure - Mon, November 4, 2024 | 12:44 pm GMT+7

Fed rate cuts, upgrading efforts to lure foreign investors back into Vietnam stock market: VinaCapital

Fed rate cuts, upgrading efforts to lure foreign investors back into Vietnam stock market: VinaCapital

The U.S. Fed’s rate cut cycle and the Vietnamese government’s fresh efforts to upgrade the local stock market status are likely to bring foreign investors back into the stock market next year, according to VinaCapital.

Finance - Mon, November 4, 2024 | 11:42 am GMT+7

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Shunsin Technology (Bac Giang, Vietnam) Limited, a subsidiary of Taiwanese giant Foxconn, will invest $80 million in Vietnam’s northern province of Bac Giang to produce integrated circuits (IC).

Industries - Mon, November 4, 2024 | 10:44 am GMT+7

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Net profits of listed companies in Vietnam increased 21.6% year-on-year in the third quarter of this year, maintaining a stable growth rate since the start of this year, according to local financial data provider FiinGroup.

Finance - Mon, November 4, 2024 | 9:31 am GMT+7

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand’s Siam Cement Group (SCG) recorded a revenue of THB36.71 billion ($1.08 billion) in Vietnam in the first nine months of this year, up 14.7% year-on-year.

Companies - Mon, November 4, 2024 | 8:00 am GMT+7

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh, Party chief of Hau Giang province, was appointed by the Politburo, the country’s supreme decision-making body, to be Khanh Hoa province’s Party chief for the 2020-2025 term.

Politics - Sun, November 3, 2024 | 7:45 pm GMT+7

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand is holding talks with Russia to expedite negotiations for a free trade agreement (FTA) with the Eurasian Economic Union (EAEU).

Southeast Asia - Sun, November 3, 2024 | 7:20 pm GMT+7

Indonesia attracts foreign investment in technology sector

Indonesia attracts foreign investment in technology sector

As many as 19 Australian companies have expressed an interest in investing in Indonesia's technology sector, Communication and Digital Affairs Minister Meutya Hafid said on Thursday.

Southeast Asia - Sun, November 3, 2024 | 7:18 pm GMT+7

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Small businesses in logistics should look to use existing tools, software and technology solutions effectively, says Dinh Thanh Son, deputy CEO of Viettel Post.

Companies - Sun, November 3, 2024 | 4:30 pm GMT+7

Vietnamese multi-sector group Masan uses AI to forecast product sales: executive

Vietnamese multi-sector group Masan uses AI to forecast product sales: executive

AI has helped Masan Group forecast the number of items likely to be sold during peak season based on available data and to optimize product placement, says An Luong, head of the corporation’s artificial intelligence & data science division.

Companies - Sun, November 3, 2024 | 2:51 pm GMT+7

Vietnam needs large, specialized logistics centers to compete better: official

Vietnam needs large, specialized logistics centers to compete better: official

Vietnam needs large-scale, specialized logistics centers that will enable greater competitiveness of local economies and enterprises, says Tran Thanh Hai, deputy head of the Ministry of Industry and Trade's agency of foreign trade.

Economy - Sun, November 3, 2024 | 11:00 am GMT+7

Vietnam manufacturing sector sees 35% increase in Q3 job orders: Adecco

Vietnam manufacturing sector sees 35% increase in Q3 job orders: Adecco

Vietnam’s manufacturing and sourcing sectors saw a substantial 35% year-on-year increase and a 52% quarter-on-quarter increase in Q3/2024 job orders, global workforce solutions provider Adecco said in a reseach report released Thursday.

Economy - Sun, November 3, 2024 | 9:00 am GMT+7

Construction majors to continue capitalizing on public investment projects

Construction majors to continue capitalizing on public investment projects

Vietnamese construction giants are expected to continue capitalizing on public investment projects for the remainder of this year after delivering strong performances in the third quarter, analysts say.

Companies - Sun, November 3, 2024 | 8:00 am GMT+7

Former Government Office chairman receives $7,900 bribe from property project

Former Government Office chairman receives $7,900 bribe from property project

Mai Tien Dung, former Minister-Government Office Chairman, received a bribe worth VND200 million ($7,900) from Nguyen Cao Tri, owner of the Dai Ninh eco-resort and urban area project in Lam Dong province.

Society - Sat, November 2, 2024 | 9:13 pm GMT+7

Thai food giant CP enters public-private partnership to promote food system transformation

Thai food giant CP enters public-private partnership to promote food system transformation

Thai-invested C.P. Vietnam Livestock JSC and the Partnership for Sustainable Agriculture Vietnam (PSAV) signed a memorandum of understanding Friday on working together to advance sustainable agriculture in the country.

Companies - Sat, November 2, 2024 | 7:16 pm GMT+7

Central Vietnam province Quang Ngai to begin work on new VSIP industrial park next year

Central Vietnam province Quang Ngai to begin work on new VSIP industrial park next year

Vietnam’s central province of Quang Ngai will work with the investor to have construction of VSIP II Quang Ngai, a facility based on the Vietnam-Singapore Industrial Park (VSIP) model, begin in August 2025.

Industrial real estate - Sat, November 2, 2024 | 3:47 pm GMT+7