Limits on foreign JSCB stock raised

The shareholder limit of individual foreign organisations in JSCBs will also be increased from 10 per cent to 15 per cent, while the cap on individual investors will remain unchanged at 10 per cent.
A State Bank official told Vietnam Investment Review that domestic banks needed to begin acquiring expertise, technologies and know-how from their foreign counterparts in order to improve financial capacity and management skills.
“The best, if not the only way to get this done is to let foreign banks directly participate in the operation of local banks by contributing money to their capital sources,” said Kieu Huu Dung, director of the State Bank’s credit institutions department.
In the past, foreign bank branches were not permitted to buy shares at local banks because Vietnamese law did not recognise the branches as legal entities, which meant they were not viewed as foreign investors.
The State Bank has decided to allow foreign banks to exist as eligible stakeholders, alongside other general foreign investors.
Foreign banks operating in the country welcomed the news, emphasising the need for regulations that introduce more flexibility to the market and allow for closer links between foreign banks and joint stock banks.
“Purchasing shares in joint stock banks will not only allow foreign banks to act as investors, but also to function as partners in developing new products and services while facilitating information exchange,” said Jean-Charles Belliol, general director of Credit Lyonnais Vietnam.
While Belliol was not explicit about Credit Lyonnais’ intentions, the State Bank’s Dung said that foreign banks such as ANZ and HSBC had already expressed interest in contributing to local banks.
To date, Sacombank and Asian Commercial Bank (ACB) are the only two join stock banks of a nationwide 54 to have taken on foreign shareholders. They are the International Financial Company and the Dragon Capital.