ASEAN KEY DESTINATIONS
Vietnam to ease foreign ownership ceiling in banks
VIETNAM is changing rules to allow foreign investors bigger stakes in local banks in its latest move to rebuild a financial sector battered by bad debt, according to the country’s prime minister.
The government will soon issue a decree to permit foreigners to buy stakes “above the current 30 per cent ceiling”, Prime Minister Nguyen Tan Dung was quoted as saying in a government statement late on Monday. He did not elaborate.
The 30 per cent cap covers total foreign shareholdings and limits a single foreign strategic investor to a one-fifth stake.
That has proved unattractive for many foreign lenders which see little incentive in a minority share and limited control of banks requiring restructuring and recapitalisation.
“At least the policy would help expand the market because with the current 30 per cent limit for foreign ownership, Vietnamese banks will be out of sight of financial investors,” said Trinh Hoai Giang of Ho Chi Minh City Securities.
Dung made the comments to Nobuyuki Hirano, president of Japan’s Bank of Tokyo-Mitsubishi UFJ, which owns 19.73 per cent of VietinBank. It is among only six foreign lenders that are strategic investors in Vietnamese banks.
Vietnam is recovering from a toxic debt headache and real estate slump caused by unrestrained lending and costly investments by state-run firms in non-core areas. Its non-performing loans (NPL) ratios have been among Asia’s highest.
Moves to free-up the banking sector come as Vietnam pursues a broad but protracted programme of liberal reforms, including partial state-sector privatisation and greater room for foreign equities investment, as interest grows in one of Asia’s fastest growing economies, from clothing and high-tech manufacturing to retail and agribusiness.
ANZ last week maintained its 6.5 per cent forecast for GDP growth in 2015 and 2016.
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