SHB's employees and customers wearing masks during transactions in its office. (Photo: VNA) Hanoi (VNS/VNA) - As the market is witnessing adjustments in the rate ofownership for foreign investors in banks, analysts say that it depends onthe strategy and business plan of each bank from time to time.
Forexample, recently, Saigon Hanoi Commercial Joint Stock Bank (SHB) has announcedto temporarily lock the room for foreign investors at 10 percent to carry outthe stock offering and issuance plan that has been approved by the GeneralMeeting of Shareholders in 2021.
Previously,the General Meeting of Shareholders approved the ownership rate of foreignstrategic investors not to exceed 20 percent of charter capital. At the sametime, SHB also fixed the foreign ownership rate of 10 percent at the VietnamSecurities Depository (VSD).
Thishelps the bank to find and select foreign strategic investors with suitablecapacity, providing the best benefits to shareholders, customers and the bankitself, according to a representative of SHB.
VSDhas also just announced SeABank (SSB) will raise the foreign ownership rate tothe maximum, from 0 percent to 5 percent. The bank also announced that it wouldnot issue shares in the form of private offering to domestic and foreigninstitutional and individual investors, but issuing to existing shareholdersinstead.
Decree01/2014/ND-CP dated January 3, 2014 of the Government on foreign investorsbuying shares from Vietnamese credit institutions stipulates that the totalshare ownership rate of foreign investors must not exceed 30 percent of thecharter capital of a Vietnamese commercial bank.
However,observing the market, regarding locking or opening the room, very few banksraised the room to the maximum but kept it under that level.
Expertsexplain that when foreign investors buy and sell outstanding shares just totake profit, this source of capital is only short-term. Not to mention,expanding the rate to the highest level causes the room to gradually dry up,thereby affecting the mobilisation plan.
Themain capital mobilisation goal of banks is to supplement, increase medium andlong-term capital, serve growth plans and strategies according to the setroadmap, as well as help improve the working safety ratio.
CanVan Luc, chief economist of the Bank for Investment and Development of Vietnam(BIDV), said that the pressure to increase capital of the banking industryremained high this year.
Withinthe last 10 years, the average growth rate of total assets of the bankingsystem was 10 - 12 percent/year, outstanding credit also increased 14 percentper year on average.
Withthe growth, banks are forced to increase capital to ensure capitaladequacy with respect to the capital adequacy ratio (CAR) according toregulations of the State Bank of Vietnam (SBV).
Inaddition, banks must ensure a minimum CAR under the risk management standardsof Basel II. Reputable rating agencies will base on that to assess creditratings, which help raise the attractiveness in the industry.
Onthe foreign investors front, they still show interest in the banking industryeven though banks have not opened room to the highest level or have locked theroom below the allowed level of 30 percent, but maintaining profitable growthand good asset quality.
GuotaiJunan Securities Vietnam said that it was undeniable that the bankingindustry would be affected by the ongoing fourth COVID-19 outbreak, causingcredit growth in the third quarter of 2021 to somewhat slow down, but in thelong term, when industrial production, export, trade and tourism recover, itwould create a driving force to stimulate the growth of the entire bankingindustry.
Inthe August 2021 review of the World Bank (WB) with the theme "DigitalVietnam: The path to Tomorrow”, it lowered the forecast for Vietnam's economicgrowth to about 4.8 percent in 2021.
Nevertheless,Rahul Kitchlu, the World Bank Acting Country Director forVietnam, said: "Although downside risks have increased, the fundamentalsof Vietnam's economy remain intact and the economy is likely to return topre-pandemic GDP growth rates of 6.5-7 percent from 2022 onwards."
Previously,Vietnam was the only country in the world that all three credit rating agenciesincluding Moody's, Standard & Poor's (S&P) and Fitch simultaneouslyraised the outlook to "positive."
Thisis the highlight that attracts the attention and expectation of foreigninvestors to foreign ownership in banks.
Especially,for credit institutions and banks, when the Vietnam-EU Free Trade Agreement(EVFTA) comes into effect, these organisations’ ownership rate will be raisedto 49 percent of their charter capital in two joint-stock commercial banks of Vietnamas committed within five years.
Thefour state-owned joint-stock commercial banks that are not under the commitmentinclude BIDV, Vietinbank, Vietcombank and Agribank./.
Forexample, recently, Saigon Hanoi Commercial Joint Stock Bank (SHB) has announcedto temporarily lock the room for foreign investors at 10 percent to carry outthe stock offering and issuance plan that has been approved by the GeneralMeeting of Shareholders in 2021.
Previously,the General Meeting of Shareholders approved the ownership rate of foreignstrategic investors not to exceed 20 percent of charter capital. At the sametime, SHB also fixed the foreign ownership rate of 10 percent at the VietnamSecurities Depository (VSD).
Thishelps the bank to find and select foreign strategic investors with suitablecapacity, providing the best benefits to shareholders, customers and the bankitself, according to a representative of SHB.
VSDhas also just announced SeABank (SSB) will raise the foreign ownership rate tothe maximum, from 0 percent to 5 percent. The bank also announced that it wouldnot issue shares in the form of private offering to domestic and foreigninstitutional and individual investors, but issuing to existing shareholdersinstead.
Decree01/2014/ND-CP dated January 3, 2014 of the Government on foreign investorsbuying shares from Vietnamese credit institutions stipulates that the totalshare ownership rate of foreign investors must not exceed 30 percent of thecharter capital of a Vietnamese commercial bank.
However,observing the market, regarding locking or opening the room, very few banksraised the room to the maximum but kept it under that level.
Expertsexplain that when foreign investors buy and sell outstanding shares just totake profit, this source of capital is only short-term. Not to mention,expanding the rate to the highest level causes the room to gradually dry up,thereby affecting the mobilisation plan.
Themain capital mobilisation goal of banks is to supplement, increase medium andlong-term capital, serve growth plans and strategies according to the setroadmap, as well as help improve the working safety ratio.
CanVan Luc, chief economist of the Bank for Investment and Development of Vietnam(BIDV), said that the pressure to increase capital of the banking industryremained high this year.
Withinthe last 10 years, the average growth rate of total assets of the bankingsystem was 10 - 12 percent/year, outstanding credit also increased 14 percentper year on average.
Withthe growth, banks are forced to increase capital to ensure capitaladequacy with respect to the capital adequacy ratio (CAR) according toregulations of the State Bank of Vietnam (SBV).
Inaddition, banks must ensure a minimum CAR under the risk management standardsof Basel II. Reputable rating agencies will base on that to assess creditratings, which help raise the attractiveness in the industry.
Onthe foreign investors front, they still show interest in the banking industryeven though banks have not opened room to the highest level or have locked theroom below the allowed level of 30 percent, but maintaining profitable growthand good asset quality.
GuotaiJunan Securities Vietnam said that it was undeniable that the bankingindustry would be affected by the ongoing fourth COVID-19 outbreak, causingcredit growth in the third quarter of 2021 to somewhat slow down, but in thelong term, when industrial production, export, trade and tourism recover, itwould create a driving force to stimulate the growth of the entire bankingindustry.
Inthe August 2021 review of the World Bank (WB) with the theme "DigitalVietnam: The path to Tomorrow”, it lowered the forecast for Vietnam's economicgrowth to about 4.8 percent in 2021.
Nevertheless,Rahul Kitchlu, the World Bank Acting Country Director forVietnam, said: "Although downside risks have increased, the fundamentalsof Vietnam's economy remain intact and the economy is likely to return topre-pandemic GDP growth rates of 6.5-7 percent from 2022 onwards."
Previously,Vietnam was the only country in the world that all three credit rating agenciesincluding Moody's, Standard & Poor's (S&P) and Fitch simultaneouslyraised the outlook to "positive."
Thisis the highlight that attracts the attention and expectation of foreigninvestors to foreign ownership in banks.
Especially,for credit institutions and banks, when the Vietnam-EU Free Trade Agreement(EVFTA) comes into effect, these organisations’ ownership rate will be raisedto 49 percent of their charter capital in two joint-stock commercial banks of Vietnamas committed within five years.
Thefour state-owned joint-stock commercial banks that are not under the commitmentinclude BIDV, Vietinbank, Vietcombank and Agribank./.
VNA
