Restrictions in finance and governance force domestic banks to look for support from foreign partners to help them grow rapidly in the context of rising competition from the country’s integration into the world market.
Finding no foreign strategic partners, VP Bank had to ask its shareholders in October 2015 to approve a plan to issue a number of shares, equal to 20% of the bank’s capital, to overseas investors in order to raise capital to serve the bank’s core businesses.
Under the current regulations, cap on foreign holdings in a Vietnamese bank is set at 30%. According to experts, the rule makes investment into domestic banks less attractive as foreign investors with low stakes have no say in the decision making process in such banks.
Besides, experts said, foreign investors are also mulling other options such as setting up independent operations rather than teaming up with local institutions such as in the case of ANZ. After divesting from Sacombank, ANZ scaled up its presence as a wholly foreign-owned bank in Vietnam.
However, to attract foreign strategic partners, experts also recommended to domestic banks that they improve their transparency.
Deputy Director of the Central Institution for Economic Management Vo Tri Thanh said that the transparency was a key factor in attracting foreign partners. Transparency must exist at all levels and banks must commit to it, both, in their reporting and operations, he said.
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