Foreign ownership at acquirers of weak banks to rise to 49%

Foreign ownership at acquirers of weak banks to rise to 49%

The new decree also regulates that the total share ownership of foreign investors at a Vietnamese non-bank credit institution will also not be allowed to exceed 50 per cent of the institution’s charter capital.

According to the current regulation, the total share holding of foreign investors will not be permitted to exceed 30 per cent of charter capital of a credit institution. — Photo tinnhanhchungkhoan.vn

The total share ownership of foreign investors in a Vietnamese credit institution that acquires weak credit institutions will be allowed to increase from the current 30 per cent to a maximum of 49 per cent of its charter capital from May this year.

The credit institutions do not include those that the State holds more than 50 per cent of charter capital.

The regulation is under newly-issued Decree 69/2025/NĐ-CP on purchasing shares of Vietnamese credit institutions of foreign investors, with it taking effect from May 19.

According to the current regulation, the total share holding of foreign investors will not be permitted to exceed 30 per cent of charter capital of a credit institution. Meanwhile, the holding of a strategic foreign investor and the concerned persons of such foreign investor at a credit institution will not be allowed to exceed 20 per cent of charter capital of a credit institution.

The new decree also regulates that the total share ownership of foreign investors at a Vietnamese non-bank credit institution will not be allowed to exceed 50 per cent of the institution’s charter capital.

Under the decree, if foreign investors surpass the regulated thresholds, they must reduce their ownership percentage within six months to comply with the limits.

When the total foreign ownership in a credit institution exceeds the regulated threshold, foreign investors cannot purchase additional shares until total foreign ownership falls below the prescribed limits.

The State Bank of Vietnam (SBV) has so far completed the compulsory transfer of four vulnerable banks: CB, Oceanbank, DongA Bank and GPBank to Vietcombank, MB, HDBank, and VPBank, respectively.

In addition to the increase in foreign ownership cap, credit institutions that acquire weak banks will also enjoy many other preferential policies, such as refinancing loans with preferential interest rates, a reduction of required reserve ratios and credit expansion according to the amended Law on Credit Institutions.

According to analysts of the Việt Dragon Securities Company (VDSC), getting the SBV’s refinancing loans with preferential interest rates will help the acquirers of weak banks maintain liquidity without having to bear higher capital costs.

Regarding the incentive of a 50 per cent reduction in the required reserve ratio, VDSC’s analysts believe this will help the acquirers increase flexibility in capital management by increasing the amount of available capital for lending and investment, which will accelerate the growth rate of total assets and improve profitability if they can take advantage of the new capital source to invest in high-yielding assets.

Meanwhile, without needing to consolidate financial statements with transferred banks, the acquirers will limit the negative impact on their own financial statements, safety ratios and other regulatory limits. 

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