Banks to be forced to list shares to help stop cross-ownership
Banks to be forced to list shares to help stop cross-ownership
The State Securities Commission (SSC) and the State Bank of Vietnam (SBV) have urged commercial banks to list their shares on the bourse to make it easier to control the banks’ finance situation.
Commercial banks now cannot delay the listing any longer since the Prime Minister Nguyen Tan Dung, at the 2014 banking conference, stressed that all banks must list their shares on the bourse, a method to help minimize the cross-ownership, a serious disease of the Vietnamese banking sector.
To date, only 9 banks out of the 37 operational commercial banks list their shares on either the Hanoi or the HCM City Stock Exchange.
Nguyen Tri Hieu, a banking expert, applauding the Prime Minister’s decision, said that in the US, all the banks, big and small, public or not, have to list shares on the bourses or OTC trading floors.
The CEO of a foreign investment fund in Vietnam noted that the bad debts still cannot be settled to the every root partially because of the problems relating to the cross-ownership in banks and the improper management by the watchdog agency.
It will take banks a lot of time to experience the restructure process to renovate themselves, while the national economy would have to pay heavy price for this. Therefore, it would be better to let shareholders and involved parties, especially the global strategic partners, to get involved in the restructure process, through the stock market.
Dr. Nguyen Van Thuan, the Finance & Banking Dean of the HCM City Open University, said what the banking sector needs now is the transparency. All the finance reports must be audited and released on schedule as required like listed companies. Therefore, it is necessary to force all the banks to list shares on the stock exchanges or the UpCom market.
“Commercial banks, under the hard pressure from the investors, the strict regulations of the stock market, will have to improve themselves to ensure the transparency,” he noted.
Le Dat Chi from the HCM City Economics University also commented that it is a growing tendency in the world that all public companies list their shares to ensure the transparency.
He pointed out that listed banks have enjoyed big benefits from the listing. The prices of the listed banks’ shares are always higher than the prices of unlisted banks’ shares, simply because the banks with higher transparency would be more attractive to investors.
Economists have also suggested raising the ceiling foreign ownership ratio in Vietnamese commercial banks as a solution to stop the cross-ownership.
The Decree No. 01/2014 which takes valid on February 20, 2014, stipulates that a foreign strategic shareholder can hold up to 20 percent (instead of 15 percent) of stakes in a Vietnamese bank, while foreign investors can hold up to 30 percent of the chartered capital in a bank (instead of 20 percent).
Only in specific cases, the ceiling ratios could be higher if approved by the Prime Minister.
Nevertheless, the slight increase in the foreign ownership ratio still does not please foreign investors, who believe that no breakthrough would be in the market.
The Vietnam Association of Financial Investors (VAFI) has proposed to raise the ceiling foreign ownership to 49 percent from 30 percent currently.
Hieu also thinks it would be better to allow foreign investors to hold up to 49 percent of stakes, not only in the Vietnamese weak banks.
vietnamnet
