The 2017 amended Law on Credit Institutions consists of regulations designed to restrict the ownership of big shareholders in many credit institutions, and prevent abuse of positions of managers and big shareholders in providing credit.

Under the law, managers of credit institutions must not concurrently hold posts at other credit institutions and businesses.

SBV issued relevant circulars, including Circular 22/2019 which sets limitations on share ownership ratios that investors can buy and hold, aiming to restrict cross ownership among credit institutions and perfecting the legal framework on credit activities.

The Law on Credit Institutions approved by the National Assembly on January 18, 2024 reduces the ceiling share ownership ratios of shareholders, shareholders and related persons.

Under the law, the maximum ownership ratio of one institutional shareholder has been reduced from 15 percent to 10 percent; and the maximum ownership ratio of one shareholder and related persons is now 20 percent instead of 15 percent.

The shareholders holding one percent or higher of charter capital in a credit institution must make the information public.

Other restrictions have been set to ensure transparency in defining related persons, thus restricting and preventing cross-ownership status that may control credit institutions’ operations.

With the new regulations and strong enforcement, ownership ratio excess and cross ownership have declined, according to SBV’s report to the seventh session of the 15th National Assembly.

However, SBV added that it is still facing difficulties handling cases where shareholders hold ownership ratios higher than allowed, when big shareholders and related persons deliberately conceal the situation by asking other individuals or institutions to claim share ownership in their names, and not in the real investors’ names.

The problem poses risks for credit institutions’ operations.

It is difficult to discover, prevent and handle cross ownership because it is under  management of many different ministries and branches. SBV only controls credit institutions, and doesn’t have information about the ownership ratios of enterprises in other business fields.

It is difficult to discover violations in bank ownership if shareholders and their related persons deliberately conceal the situation and circumvent laws on ceiling ownership ratios. In these cases, violations can only be discovered and recognized through investigations.

SBV is unable to check information about enterprises, especially non-public ones, and identify the accuracy of information sources amid the rapid development of the stock market and technology.

Ngoc Tuan