Because the foreign chamber is almost exhausted, many commercial banks have to lock it to wait for a good opportunity to sell shares to foreign strategic partners. If they don’t lock the foreign room, individual investors will buy all the shares on the exchange. Since May 2021, VPBank has maintained the foreign margin at 15%. This commercial bank officially increased the foreign ownership rate from 15% to 17.5% on March 4, 2022. On that day, foreign investors massively bought its shares on the stock market, causing VPBank’s stock to jump by nearly 3% during the trading session.
During a recent meeting with investors, VPBank informed that the private placement for the strategic partners remains as planned, is expected to be completed in the first half of 2022. If the private placement is successful, the equity of this commercial bank may reach VND 125 trillion after issuance to foreign strategic shareholders, making it one of the leading commercial banks with the highest registered capital in the banking system.
Also, from August 2021, SHB has temporarily blocked the foreign margin at 10% to implement the plan to offer and issue shares to foreign investors. SHB recently adjusted the foreign margin from 10% to a maximum of 30%. SHB executives have said that some international financial groups, banks and investment funds want to become its strategic investors.
OCB also locked the foreign margin at 22% to carry out the private placement plan of 70 million shares (5.1% of total outstanding shares) with foreign strategic shareholders, which is expected to be completed in 2022. .
Sacombank said it will sell about 30% of its shares to foreign investors after the restructuring is completed in 2022. Some commercial banks that still have foreign room, such as Nam A Bank, VietCapitalBank, Kienlongbank, VietA Bank and SCB, also locked a foreign room. because they plan to find foreign strategic investors this year.
While foreign investors tended to be net sellers in the Vietnamese stock market, they were still net buyers of bank stocks. This shows that this industry is interested and sought after by foreign investors. Many commercial banks only need to open the foreigners’ room, then other foreign investors will immediately rush to buy shares and fill it. Statistics also show that banking is currently the sector in which foreign investors invest the most money to hold shares with 16.8 quadrillion VND, followed by the food and beverage industry with 10 quadrillion VND and real estate. with 8.9 quadrillion VND.
Expanding the foreign chamber is urgently needed
In the context where commercial banks are rushing to raise capital to improve the capital adequacy ratio (CAR) to meet Basel II and Basel III standards because the CAR of Vietnamese commercial banks is lower than that of banks in the region, the expansion of share limits becomes more urgent. Most commercial banks expect to be allowed to extend the foreign margin to easily manage the capital increase plan through private placement to foreign shareholders.
Commercial banks said that if the foreign chamber was opened, it would attract capital, help improve banks’ internal resources in the long term, and share management experience; strengthening financial capacity, accelerating the progress of settling bad debts, in particular the existing risk of bad debts due to the impact of the Covid-19 pandemic. Not only private commercial banks but also public commercial banks like Vietcombank have also proposed to increase the foreign ownership rate to 35% to help the bank better comply with capital adequacy regulations and to have more resources to develop credit and support economic growth.
Dr. Nguyen Tri Hieu, a banking and financial expert, believed that the low foreign margin is the reason why M&A transactions in the banking sector have been quiet lately. Many foreign investors are interested in companies in the financial and banking sector. However, the low foreign ownership ratio has made them withdraw because they fear it will be difficult for them to participate deeply in the corporate governance process.
“Although the interest of foreign investors in this sector is extremely large, the government should consider easing the foreign margin, so that banks can attract capital from foreign investors to increase financial potential, expand scale and accelerate progress in resolving bad debts,” Dr. Nguyen Tri Hieu suggested.
According to Viet Capital Securities Company (VCSC), the regulations on the maximum foreign ownership ratio make it difficult for all commercial banks to loosen the foreign margin. Although the big four state-owned commercial banks (Big 4) are not expected to expand the foreign margin, it is possible to increase the ownership rate of foreign investors in some private joint-stock commercial banks. Because, according to the Vietnam – EU Free Trade Agreement (EVFTA), which entered into force in August 2020, Vietnam undertakes to allow European credit institutions, within five years of signing, to increase the ownership rate to a maximum of 49% of the registered capital of two joint-stock commercial banks in Vietnam without having to wait for the decision to open the foreign chamber by the state management agency. Therefore, it is necessary to review and research an appropriate property ratio limit and provide a roadmap following Vietnam’s commitments to the world.
Mr. Nguyen Quoc Hung, secretary general of the Vietnam Bankers Association, said it is necessary to consider increasing the limit of shares held by foreigners in Vietnamese banks, which will attract capital flows. foreign investors, helping commercial banks to raise equity, improve financial capacity and competitiveness. However, the expansion of the foreign place should be careful, ensuring the harmony of the interests and needs of investors in the state management role. The limit of shares held by foreigners can be regulated in the sense of classification by banking group, based on the rating of the State Bank of Vietnam. Banks that have met the Basel II standards and are moving to the Basel III standards can increase the foreign chamber limit to more than 30%.