Once again, the foreign ownership ceiling in Vietnam’s banks is in the news.

Some experts believe that it is necessary to set the ceiling for foreign ownership ratio in the banking sector because it is a ‘sensitive’ business field in the national economy, and foreign investors’ rights in banks need to be limited.

Meanwhile, others argue that lifting the ceiling would make Vietnam’s banks more attractive and be in line with international practice.

The current Decree 01 stipulates that the ownership ratio of one foreign strategic investor must not be higher than 20 percent of the charter capital of one Vietnamese credit institution. The total foreign ownership ratio must not be higher than 30 percent.

A high number of Vietnam’s banks have high foreign ownership. Mitsubishi, for example, is holding 19.7 percent of VietinBank’s shares, while Sumitomo Mitsui has 15 percent of Eximbank shares, and Mizuho 15 percent of Vietcombank shares.

With the current regulation, it is impossible for Mitsubishi to buy more VietinBank’s shares and analysts believe this is the reason why VietinBank is finding it difficult to increase its charter capital.

The government and the State Bank of Vietnam (SBV) has many times sent word intimating that Vietnam is willing to sell 100 percent of shares in weak banks to foreign investors to accelerate the bank restructuring process. However, there has been no sign of the lifting of the ownership ratio ceiling for other banks.

Experts have once again called on the government to lift the cap on foreign ownership to pave the way for more foreign capital flow into Vietnam.

An expert said the government could apply a flexible policy when setting up ownership ratio ceiling. As for state-invested banks, for example, the ceiling should be 30-40 percent, as the state plans to reduce its ownership ratio to a minimum of 51 percent instead of 65 percent.

As for joint stock banks, the ceiling would depend on the scale and influence of every bank. The ceiling of 49 percent could be set for banks with charter capital of over VND10 trillion, and over 51 percent for banks with less than VND10 trillion.

US$1=VND22,000

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