At present, foreign interests may hold 30% total of chartered capital and that is not set to change, but one foreign investor will be allowed to hold up to 20% instead of 10% of chartered capital as currently applied.

The issue of raising individual portions of that has been on the top of the agenda for SBV and commercial banks for weeks. Lawmakers who initially tabled the issue said that once approved, the measure would pave the way for foreign investors to penetrate Vietnam’s finance and banking market while creating favourable conditions for local banks to access modern technology and develop services.

Foreign and local sources have supported the measure for years. In the recent deals, foreign partners expressed interest in increasing their holdings and have asked for more. The Vietnam Bank for Private Enterprise (VPBank) is contemplating selling 10% of shares to Singaporean OCBC in March 2006, but the two parties agreed that OCBC could go up to 20% pending approval.

Analysts say that foreign investors tend to aim at long term business when penning agreements on share purchase, and larger holdings would allow them to get more involved in operations. While foreign investors may manage banks as they see fit, the local banks would have access to modern banking technology from foreign partners.

Under the latest draft of the decree, local banks must have at least VND500bil ($33mil) in chartered capital to sell shares to foreign investors, and foreign banks that want to buy shares at local banks must be listed among the world’s 500 top banking institutions.

Several of Vietnam’s leading joint stock banks have sold shares to foreign investors, including Techcombank (to HSBC), ACB (to Standard Chartered Bank), Sacombank (to ANZ), and VP Bank (to OCBC). Others, like Eximbank and Military Bank, are also seeking foreign partners.

SBV Governor Le Duc Thuy said recently that the deals would benefit both parties, the local banks and foreign investors, and above all they would help create a healthy financial market.

Source: VietnamNet