At a TPBank branch (Photo: hanoimoi.com.vn) Hanoi (VNA) – No longer hot on the stockmarket, yet banking sector remains one of the priorities of foreigninvestors, with foreign ownership rate in many banks reaching the cap of 30% as regulated.
According to regulations, the share ownership rate of a foreignstrategic investor must not exceed 20% of the charter capital of a Vietnamesecredit institution. Meanwhile, the cap for the ownership of all foreigninvestors in a domestic credit institution is 30%. Therefore, many foreign investors always eye stocks of potential banks.
According to the Vietnam SecuritiesDepository, there are up to 16 banks with foreign ownership rates of over 15%,including some that have reached or are close to the cap, such as the Asia Commercial Joint Stock Bank (ACB), the MaritimeCommercial Joint Stock Bank (MSB), the Tien Phong Commercial Joint Stock Bank(TPBank), and the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank).
Sacombank, inparticular, is nearing the cap of 30%. Recently,VPBank signed an agreement to issue a private placement of 15% of its chartercapital to Sumitomo Mitsui Banking Corporation (SMBC) - Japan, bringing in 35.9trillion VND (1.56 billion USD) in Tier 1 capital and raising its total equity to around 140trillion VND. It has been a record-breaking deal in the financial sector inVietnam to date. SMBC CEO Jun Ohta commented that despite the current globaluncertainties, investors still have faith in Vietnam's development.
There are still manybanks that have room for foreign investors, such as the Vietnam InternationalCommercial Joint Stock Bank (VIB), the Orient Commercial Joint Stock Bank(OCB), the Vietnam Technological and Commercial Joint Stock Bank (Techcombank),and the Military Commercial Joint Stock Bank (MB Bank).
VIB plans to increaseforeign ownership to 30% this year. Meanwhile, the OCB plans to offer 70 million shares todomestic and foreign investors. In case foreign investors show interest inpurchasing OCB’s shares issued privately, it will propose lifting its foreignownership cap to a maximum of 30%.
Secretary General of the Vietnam Banks’ Association (VNBA) NguyenQuoc Hung said raising the foreign ownership cap is necessary as it hasbrought positive changes in finance, technology and management.
Under a new proposal by theState Bank of Vietnam (SBV), mandatory transfer-receiving credit institutionsmay have their foreign ownership limit raised to 49%.
Recently, credit rating agencyMoody's upgraded the issuer rating and long-term local and foreign currencydeposit ratings of eight Vietnamese banks by one notch, as well as one notch inpartner risk ratings in local and foreign currency and partner risk assessmentfor seven banks.
Moody's said this upgrade reflects the increasing economicstrength of Vietnam compared to other countries in the same group, as well asimproved resilience to external shocks and more effective policies. Moreover,Vietnamese banks will attract investment and cooperation from internationalfinancial institutions.
MasatakaSam Yoshida, Global Director of the Cross-Border M&A Services at Japan’s RECOFCorporation, affirmed that Vietnam's strong economic fundamentals will continueto drive M&A activities this year. Investors interested in the Vietnamese marketaim to penetrate and expand their long-term presence there rather thantargeting cheap assets./.
