The three largest commercial banks in Vietnam have asked the government to lift the foreign ownership ratio ceiling in local banks.
Thirsty for capital and eyed by foreign investors, Vietcombank, VietinBank and BIDV, the three biggest banks in the system, cannot proceed with their capital transfer affairs.
Kicking off a plan to sell 7.73 percent of shares to GIC, a Singaporean national investment fund, in 2016, Vietcombank wrapped up the sale of 3 percent of capital to GIC in 2018. The bank still can sell 7 percent more of shares to foreign investors.
Though having collected VND6.2 trillion from the deal, Nghiem Xuan Thanh, chair of Vietcombank, said increasing capital remains an urgent need for the bank. The bank has asked for the government’s permission to lift the foreign ownership ratio ceiling.
Vietinbank cannot sell more shares to foreign investors as the foreign ownership ratio has hit the ceiling of 30 percent. The state’s ownership ratio in VietinBank has dropped to the lowest possible level of 65 percent. The only solution that VietinBank has found is not paying dividends to shareholders, and using the money to raise capital.
In the long term, the bank looks forward to a new policy which sells more than 30 percent of shares to foreign investors.
A local newspaper quoted VietinBank’s chair Le Duc Tho as saying that the bank proposed the government to reduce the state’s ownership ratio to 51 percent instead of 65 percent, after 2020.
As for BIDV, it still can sell 30 percent of shares to foreign investors. However, it complained that because of the strict regulations, it cannot complete the deal of selling 15 percent of shares to Keb Hana Bank.
Under current regulations, the prices at which Vietnam’s banks sell their shares to foreign investors must not be lower than market prices, and new investors must hold shares for one year or more before transferring to other investors. The provisions make it difficult for Vietnam’s banks to negotiate with large foreign investors.
Vo Tri Thanh, an economist, thinks that the Ministry of Finance (MOF) may allow state owned banks to pay dividends in shares this year to raise charter capital.
In the long term, the best solution is to continue to divest the state’s capital and lift the ownership ratio ceiling for foreign investors. He suggested issuing golden shares to investors as a way to lift the ceiling. With these kind of shares, investors will have all rights, except voting rights.
“Vietinbank cannot sell more shares to foreign investors as the foreign ownership ratio has hit the ceiling of 30 percent. The state’s ownership ratio in VietinBank has dropped to the lowest possible level of 65 percent. The only solution that VietinBank has found is not paying dividends to shareholders, and using the money to raise capital.”
