(PLO)- The foreign room of banks receiving forced transfer of weak credit institutions may be increased to 49%, instead of 30% as at present.
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.
The authorities should soon loosen the room for foreign investors in general at listed banks. This is absolutely necessary. Because in many other markets in the region with T+ transactions, transaction infrastructure and technical conditions similar to Vietnam, they have been promoted to emerging markets, while Vietnam is still a frontier market. In short, the only difference is that the percentage of foreign investors in Vietnam is limited.
Banking and finance expert DUONG ANH VO
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.
Two ways to upgrade to emerging markets
According to financial expert Nguyen The Minh, there are two ways to solve the problem of upgrading to an emerging market. The first is to open the room of foreign investors to 30% higher. Second, the issuance of non-voting certificates of deposition (NVDR) is allowed – the same as in Thailand. This is a potential securities, attracting a large number of foreign organizations and individuals to participate in the Vietnamese stock market without having to worry about the possibility of acquisition.
Many banks have run out of foreign room
As of January 3, many banks have run out of foreign room with the maximum rate of 30% such as Tienphongbank, ACB, MSB.
Some banks are temporarily locking foreign room, such as VPBank only opening room for foreign investors at 17.642%, the proportion of foreign investors holding also up to 17.64%. Similarly, at An Binh Bank, this ratio is 24.6% and 24.61%, respectively; Techcombank is 22.4595% and 22.46%; OCB is 22% and 21.45%; VIB is 20.5% and 20.5%; LienVietPostBank is 5% and 4.99%…
In the opposite direction, there are also banks that have opened the room for foreign investors to the ceiling of 30% but still do not attract enough such as Bac A Bank, Kienlongbank, VietBank, Saigon Industry and Trade, Nam A…