A view of a HDBank’s transaction office in Hanoi. HDBank might be allowed to increase the foreign ownership cap to 49% after receiving compulsory transfer of a weak bank. (Photo: VNA) Under a report recently submitted to the Government, the SBV saidthe revised decree will amend and supplement a number of articles of theGovernment's Decree No. 01/2014/ND-CP dated January 3, 2014.
Notably, the revised decree drafts to increase the foreignownership limit for credit institutions that receive the compulsory transfer ofweak credit institutions to 49%.
Decree No. 01 stipulates that the total share ownership rate offoreign investors must not exceed 30% of the charter capital of a Vietnamesecredit institution.
According to the SBV, four banks will receive compulsory transferof four weak banks and two of them will be allowed to increase the foreignownership limit to 49%, but detailed plans haven’t released yet.
Vietcombank, Military Bank, HDBank and VPBank are the fourfinancial institutions that are reportedly known to either have already statedintentions to receive compulsory transfer or aim to do so in the near future.
Military Bank and Vietcombank had intended to take over two weakcredit institutions, and the plans were given the green light in theirshareholders’ meetings this year.
At the shareholders’ meeting last year, Luu Trung Thai, CEO ofMilitary Bank, said the admission of a bank under the compulsory transferprogramme is in line with the Government and the State’s policy onrestructuring weak banks, and making the banking operation healthier and moresustainable. This is a great opportunity to obtain an operational growth ratehigher than the average growth rate by 1.5-2 times in the long term, and toimprove competitiveness.
Meanwhile, with experience in the successful restructuring ofcredit institutions and its pioneering spirit, HDBank is getting involved inthe compulsory transfer of another weak credit institution after itsshareholders voted in large numbers in favour of the plan in a meeting lastyear.
According to SSI Securities Corporation, the mandatory transferplan has positive long-term implications for HDBank, even for internationalinvestors increasing investment to accompany the bank.
Meanwhile, VPBank Chairman Ngo Chi Dung said the bank isconsidering the acquisition of a poor credit institution.
According to the current regulations, State-owned Vietcombank isnot qualified to raise the foreign ownership cap as the State must hold morethan 50% of the bank’s capital. Therefore, two of the remaining three banks MB,HDBank and VPBank will have opportunity to increase the cap./.
VNA
