OWNERSHIP CAP AN IMPEDIMENT TO FDI IN BANKING SECTOR

A government-imposed 30% cap on foreign ownership of Vietnamese banks is holding back investments in the banking sector of the fast-growing Southeast Asian nation, according to S&P Global Market Intelligence data and analysis.

Key highlights from the report include: 

·         Vietnamese lenders have attracted investments from financial companies in Japan and South Korea, but the nation’s six largest publicly listed banks have limited headroom to increase their foreign ownership. Five banks already have foreign ownership above 20%, according to data from S&P Global Market Intelligence.

·         Vietnam Prosperity Joint Stock Commercial Bank (VPBank) had the largest percentage of foreign ownership at 27.80% among the six largest publicly listed banks in the country, according to S&P Global Market Intelligence data. Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) has the second-highest foreign ownership at 27.05%. Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) had the lowest percentage of foreign ownership among the six lenders at 17.21%.

·         Japanese megabanks have been the major investors in Vietnam’s banking sector. Mitsubishi UFJ Financial Group Inc. holds a 19.73% equity stake in Vietinbank, Mizuho Financial Group Inc. holds 15% in Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and Sumitomo Mitsui Financial Group Inc. owns 15.01% of VPBank

Please find the full analysis here.

Source: S&P Global Market Intelligence