Foreign ownership ceiling ratio of domestic credit institutions yet to be lifted
The State Bank of Vietnam (SBV) has yet to unveil any firm step to woo foreign investors to the domestic debt market as well as to raise the foreign ownership ratio at local credit institutions.
General director of Standard Chartered Bank Vietnam Louis Taylor expected higher foreign ownership ratio to rapidly channel further credit into the banking industry and step up application of international standards on corporate governance and risk management at local banks.
Given the nearly exhausted source of domestic capital, the rate should be lifted up to around 40pct in order to woo foreign direct investment in the banking sector, according to economist Nguyen Tri Hieu adding that the system should be entirely opened up on banking’s stable health.
This measure has been put forward in the scheme on credit institution restructuring. However, the issue had better take into account so as not to harm the national interest, said SBV Governor Nguyen Van Binh.
Since the domestic economy has sunken into recession, banks’ shares have been much underpriced. As such, further room for foreign ownership is likely to trigger massive purchasing of banks’ shares leading to domestic banking industry in the hands of foreign investors. The situation could hardly be reversed on economic rally despite the local businesses’ affluence.
It is critical that banking system be strengthened, which would mean local lenders if to be obtained by foreign ones being offered at higher prices, which would thus guarantee domestic investors’ interests, he added.
