Loosening foreign room for banks to 49%: Necessary

This is one of the notable contents in the draft Decree amending and supplementing a number of articles of Decree 01/2014 on the purchase of shares by foreign investors of Vietnamese credit institutions. The State Bank is collecting comments.

Create opportunities to select foreign investors

According to the draft, in special cases to implement the compulsory transfer plan, the Government shall decide the total share ownership level of foreign investors in credit institutions receiving the compulsory transfer but not exceed 49% of the capital. regulations.

This means that if approved, credit institutions participating in restructuring weak credit institutions have the opportunity to attract more foreign capital flows up to a maximum of 49%.

Of the 30 listed commercial banks, only 16 have foreign ownership of more than 15%. Illustration: THUY LINH

Meanwhile, the draft still maintains the provisions such as a foreign organization not to own more than 15%, a foreign strategic investor not to own more than 20%, a foreign investor and a foreign investor. related parties must not own more than 20% of the charter capital of a Vietnamese credit institution. The total share ownership of foreign investors must not exceed 30% of the charter capital of a Vietnamese commercial bank.

According to banking and finance expert Duong Anh Vu, when receiving a forced transfer of a weak credit institution, the parent bank will have to support in terms of resources and personnel. In return, they also have certain advantages such as larger total assets, wider network, broader market scale, etc.

“Besides, the parent bank will also receive more incentives from the operator such as opening the credit room (loan limit) or adding refinancing sources. In addition, when the foreign ownership ratio is raised to 49%, it will be a premise and a good sign for the market in the context that foreign ownership is limited to children. 30%,” said Mr. Vu.

Mr. Nguyen The Minh, individual customer analysis director of Yuanta Securities Vietnam, said: “When you “carry” a weak bank, it will more or less be affected to the capital adequacy ratio. of the parent bank. It may even make it difficult for the parent bank to meet Basel II capital adequacy standards (the second version of the Basel Accord, which sets out the Basel Committee’s general principles and banking laws on banking supervision). .

A prerequisite to ensure “health” is that the parent bank must increase capital. So where is the money to raise capital? Surely the bank will not look for retail investors but must hunt foreign strategic investors.” The problem is that to attract foreign giants, the ownership ratio must be attractive enough to ensure their interests. The message to increase the foreign ownership ratio to a maximum of 49% is to create the “magnet” that has the strongest attraction for them.

Loosening foreign room is to help banks increase equity capital. Illustration: THUY LINH

The age-old story of strategic partners is that in addition to the basic right to receive dividends, they also want to have a large enough ownership percentage to participate deeply in governance and management activities, creating conditions for the business segment to be fully invested. their overseas business into Vietnam to boost growth momentum.

“Finding foreign investors is not difficult because the Vietnamese economy is growing rapidly, and in the future, the liquidity in the real estate market will also be better. At that time, bad debts at weak banks will be recovered more quickly, “- Mr. Minh stated.

Loosening the foreign room is necessary

According to the Securities Depository Center, as of January 3, out of 30 listed commercial banks, only 16 banks have foreign ownership of more than 15%. In which, many banks are in a state of running out of foreign room with the maximum rate of 30%.

Currently, banks listed on the stock exchange are also having a headache with the story of foreign investors’ ownership room. Therefore, whether the bank has closed the room or still has plenty of room, they all have the same desire to expand the foreign capital room further in order to have room for future capital mobilization plans.

Explaining why there are still banks that lock the room for foreign investors, Mr. Duong Anh Vu said: “It may be because banks are anti-takeover, but more importantly, they want to find foreign investors who can invest in foreign investors. appropriate management style and business model. That is, they always have an advantage when selling wholesale lots compared to retail lots.”

Currently, Vietnam’s stock market is still a marginal market, not an emerging market. According to Mr. Nguyen The Minh, so far, we have only focused on rambling factors such as improving the quality of the trading system, T+ transactions…

While the core, most important factor to enter the emerging market is the ownership of foreign investors. When investors plan to buy shares in Vietnam, they have to consider whether to buy or not when they have limited room. Because the room for foreign investors is limited, many organizations that want to raise their ownership ratio have to enter into an agreement transaction with another foreign investor, which increases the cost of capital and causes discontent. equal to foreign investors.

“We set a lot of goals to develop the stock market, and we want to attract big investment funds in the world. But if we want to attract them, we have to create a commensurate and fair playing field, the new partner will invest, if the playground has many limitations, it will be difficult to attract visitors.

In other words, as long as foreign ownership in listed banks is limited to 30%, the road to upgrading to emerging markets is still far away. Meanwhile, banking stocks are the group that accounts for the highest market capitalization proportion in the stock market,” – Mr. Minh analyzed.

The leader of a commercial bank also said that the interest of foreign investors is very large, but the cramped room makes them not very interested.

“If the authorities approve the opening of foreign room for listed banks to more than 30%, it will help commercial banks increase their equity capital, increase their financial potential, as well as speed up the development process. bad debt handling, thereby promoting socio-economic development”, the leader emphasized.

THUY LINH