Among high-profile names, Techcombank is expected to be the target of European investors.(Photo: Techcombank) Hanoi (VNS/VNA) - Investors from the EU will have opportunities toown higher stakes in Vietnamese banks than those from other countries underViệt Nam’s commitments in the EU-Vietnam Free Trade Agreement (EVFTA).
Under the EVFTA signed this week by the European Parliament, Vietnam and the EUhave committed to facilitate the investment environment for businesses of thetwo sides, in which the first will allow the latter’s investors to enjoy an exception– holding up to 49 percent charter capital at two Vietnamese banks.
According to Vietnam’s existing legal regulations, the maximum rate of foreignownership in a commercial bank is capped at only 30 percent.
The offer will apply only to joint stock banks, excluding BIDV, Vietinbank,Vietcombank and Agribank in which the State still holds the controlling stakes.
The offer will be valid for five years after the pact takes effect. After thefive-year deadline, the offer expires, and any proposals will be rejected.
The implementation must also comply with all of Vietnam’s current regulationson procedures for mergers and acquisitions as well as safe and competitiveconditions, including limits on the shareholding ratio applicable to eachindividual and institutional investor on the basis of national treatment.Currently, the stake owned by an individual foreign investor in a Vietnamesebank is capped at 5 percent and the maximum rate for a foreign institutionalinvestor is 15 percent.
Experts believed European investors would eye banks which have some goodcriteria, such as clearing bad debts, focusing on core credit activities andmeeting the State Bank of Vietnam’s standards.
In the list of top ten joint stock banks released last year, Techcombank,VPBank, and ACB took the leading positions, followed by TPBank, SHB, HDBank,Sacombank, VIB, MSB and SCB.
Foreign investors have shown interest in the Vietnamese banking and financialmarket in recent years, given the country’s population of nearly 100 millionwith only 30 percent of them having access to banking services.
Banking expert Nguyen Tri Hieu said that while it was hard for investorsto own wholly foreign owned banks in Vietnam, especially after the Governmentstopped issuing new licences for the establishment of wholly-owned foreignbanks in the country, the best option for foreign investors to enter theVietnamese market now was through mergers and acquisitions (M&A) with localbanks and financial firms.
“In the current context, the most common way for foreign investors to enter theVietnamese financial market is to acquire stakes in local banks or buyfinancial companies instead of establishing new ones,” Hieu said, addingM&A would also help reduce many legal and procedural difficulties forforeign investors.
“Therefore, instead of paying a huge amount and spending a lot of timeestablishing a new company, M&A with local partners has more advantages,especially when local banks are also expecting to raise capital from foreignshareholders to meet the central bank’s stricter capital requirements due tothe underdevelopment of the domestic capital market,” Hieu explained./.
VNA
