The Vietnamese government plans to ease foreign ownership limits on banks as part of moves to restructure the banking system.
Some private banks will be able to have up to 49% foreign ownership – up from 30% – if they take over struggling financial institutions, it said.
The government did not name any eligible banks in the statement posted on its website, but said the exemption did not apply to state-owned commercial banks.
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“Total foreign investors’ ownership in a commercial bank that compulsorily received a distressed rival may exceed 30% but not exceed 49% of its charter capital,” according to the decree, which is expected to take effect from May 19.
In January, the central bank, the State Bank of Vietnam, directed two commercial banks to take over underperforming rivals as part of the restructuring drive that it said was necessary for political stability and social order.
Vietnam Prosperity Joint Stock Commercial Bank (VPBank) took over GPBank and Ho Chi Minh City Development Bank (HDBank) took over DongA Bank.
In October last year, also as part of the central bank’s restructuring, Military Commercial Joint Stock Bank (MBBank) took over smaller rival Ocean Bank, while state-owned Vietcombank took over Construction Bank.
$12bn embezzled from Saigon bank
Vietnam’s banking sector was rocked by an enormous scandal that generated big headlines last year.
Local property tycoon Truong My Lan lost her appeal in December last year against the death sentence imposed on her for a massive multi-billion-dollar bank fraud.
Lawyers for Lan, who founded the real-estate development company, had asked the court for a more lenient ruling, but judges said that Lan’s crimes – embezzling $12 billion from Saigon Commercial Bank – caused serious consequences for tens of thousands of people, who lost their savings.
Lan could save her life, however, if she returns the bulk of the embezzled assets, according to state media outlets, which said she faces a scramble to repay billions of dollars. If she can do that, her punishment could be reduced to life in prison.
Lan’s arrest in 2022 sparked a run on one of the country’s largest private banks by deposits, Saigon Joint Stock Commercial Bank (SCB), which was at the centre of the fraud and largely owned by Lan through her proxies.
Documents reviewed by Reuters showed Vietnam’s central bank had as of April pumped $24 billion in “special loans” into SCB in an “unprecedented” bailout.
- Reuters with additional editing by Jim Pollard
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