Bank stocks widen the gate for foreign capital

Bank stocks widen the gate for foreign capital

Foreign capital is pouring into Vietnamese bank stocks, fuelled by regulatory tailwinds and expanding foreign ownership limits across a sector poised for deeper global integration.

Since early July, foreign investors have resumed net purchases across several emerging markets in Asia. In Vietnam’s stock market, bank stocks have emerged as major magnets for foreign capital.

Opportunities, however, are not distributed evenly. In addition to financial ‘health’ and the unique stories of each bank, the level of foreign investor participation varies depending on the available foreign ownership limits, known domestically as the foreign room cap.

The return of foreign investors in July, accompanied by a streak of net buying days, has led to many banks reaching their foreign ownership ceilings. As of August 14, several major banks had already maxed out their foreign ownership limits, including Techcombank, MB, VIB, HDBank, and ACB.

VPB tickers are among the most attractive banking stocks for overseas capital

Others are nearing their limits, with less than 5 per cent room remaining, such as BVBank, SeABank, LPBank, VPBank, VietinBank, OCB, and MSB.

In terms of available shares that foreign investors can still purchase, SHB currently offers the most headroom. The bank still has more than 24 per cent of its foreign ownership room open—translating to over 990 million shares available for foreign acquisition.

This marks a notable decrease from 27 per cent in early July, indicating strong foreign buying interest in recent weeks.

Among top foreign investor favourites, VPBank’s VPB shares have attracted a net foreign inflow of $97 million since early July, making them one of the most attractive banking stocks for overseas capital.

VPBank’s foreign ownership room has tightened significantly, from 5.4 per cent at the start of July to just 3.9 per cent currently. Yet, in terms of volume, the bank still has over 316 million shares available for foreign investors, suggesting further upside potential.

With many banks nearing their foreign ownership limits, Decree No. 69/2025/NĐ-CP issued by the government on March 18 is reshaping the playing field, widening the scope for foreign capital inflows.

The decree amends and supplements key provisions of Decree No. 01/2014/NĐ-CP on foreign ownership in Vietnamese credit institutions.

Specifically, Decree 69 allows total foreign ownership in commercial banks undergoing mandatory restructuring (excluding those where the state holds over 50 per cent of charter capital) to exceed the standard 30 per cent cap, up to a maximum of 49 per cent.

This expanded ownership threshold applies within the approved restructuring timeframe and under an approved restructuring plan.

Experts view the decree as a test case for expanding foreign ownership within a narrow group of banks, helping regulators gauge its impact on financial strength, governance quality, and overall system stability.

On August 12, southern-based HDBank announced plans to seek shareholder approval for several key items, including raising the maximum foreign ownership limit from 17.5 per cent to 27 per cent.

This move comes as HDBank has filled its current foreign room. At the same time, the deadline for converting convertible bonds issued to foreign investors in 2020 has arrived. The bank must now carry out the share conversion process.

Three investors are on the list for this bond-to-share conversion: Sky Capital Advisor Pte. Ltd., Clarendelle Investment Pte. Ltd., and Core Capital Pte. Ltd., who are expected to hold over 2.04 per cent, 3.68 per cent, and 3.68 per cent of shares respectively after conversion.

Aside from long-standing ‘foreign ownership room’ allocations to foreign shareholders, banks also stand to gain significantly from large capital inflows as Vietnam's stock market moves closer to an upgrade in the upcoming international classification slated in September.

According to Bao Viet Securities Company (BVSC), seven Vietnamese stocks are expected to be included in FTSE indices such as FTSE Emerging Markets, FTSE All-World, and FTSE Global All-Cap, potentially drawing over $1.1 billion in passive investment. Bank stock VCB of major lender Vietcombank alone could attract an estimated $99 million.

Meanwhile, some banks appear to be adopting a wait-and-see approach, with little to no foreign ownership used up.

These include Bac A Bank which still doesn’t have foreign shareholders, PGBank with 0.01 per cent of its foreign ownership limit used up, VietBank with 0.02 per cent, Kien Long Bank with 1.36 per cent, and Nam A Bank with 1.89 per cent.

Low foreign room usage does not necessarily indicate a lack of appeal, it may reflect each bank's internal policy on shareholder structure or a strategic wait for the right foreign partner.

Among smaller banks, VietABank, Kien Long Bank, BVBank, and SaigonBank have announced plans to list shares on the Ho Chi Minh Stock Exchange between 2025 and 2026. VietABank debuted its shares on HSX on July 22.

According to Hanoi-based credit rating firm VIS Rating, this listing move is aimed at helping banks access to new capital sources, particularly from foreign investors, while bolstering risk buffers and supporting high credit growth targets.

VIR