Vietnam banks seek to exceed foreign ownership cap


At least four partly private banks in Vietnam, including Vietcombank and Vietinbank, are reportedly seeking the government’s permission to increase their foreign ownership above the stipulated 30 percent cap.

In a report Sunday, news website Dau Tu (Investment) said ABBank plans to raise its foreign holding to 49 percent from 30 percent at the moment, while Saigon Commercial Bank seeks to sell more than 50 percent to foreign investors.

Vietinbank, the country’s second largest lender by assets, said recently it would seek permission to hike foreign ownership from 27.75 percent now to more than 40 percent.

Bui Nhu Y, deputy CEO of Vietinbank, was quoted as saying that the bank and nine other lenders, including Vietcombank and Techcombank, are under pressure to increase their capital since they have been ordered to conform strictly to international norms for a two-year trial period, starting this year.

If Basel II norms are applied, Vietnamese banks‘ capital adequacy ratios will decline by 10-20 percent, while many of them are estimated to have 9-10 percent ratios against a minimum requirement of 9 percent now, Dau Tu quoted a study by Vietcombank Securities as saying.

Last month Vietcombank reportedly sought shareholders’ approval to issue new shares equivalent to 10 percent of its capital to foreign investors.

Japan’s Mizuho Corporate Bank Ltd., which owns 15 percent of the country’s third largest lender, plans to acquire another 5 percent, Dau Tu reported.

If both happens, Vietcombank’s foreign ownership will rise to around 35 percent from 21 percent now, it said.

Commenting on banks‘ new share sale plans, Andy Ho, managing director and chief investment officer of asset management company VinaCapital, told Dau Tu that Vietnamese banks are in need of foreign capital to strengthen their finances and competitiveness, and consolidate the ongoing restructuring process.

Increasing the foreign ownership in banks would also benefit the stock market given that the stocks of eight listed banks, including BIDV, Vietcombank and Vietinbank, account for a large proportion of the total market capitalization, he said.

Foreign investors are greatly interested in Vietnam’s banks, but the current restrictions limit their prospects, he said.

Owning less than 50 percent means foreign investors cannot control management, and so at the moment they only invest in big banks, he added.

Source: Thanhnien News