Vietnam has lifted its 30% cap on foreign ownership in the banking sector to 49% for some domestic banks in an effort to attract more foreign direct investment (FDI) and strengthen the country’s banking sector. The policy will come into effect on 19 May 2025. It comes after the government took over struggling banks as part of a restructuring of the country’s finance industry.
“Total foreign investors’ ownership in a commercial bank that compulsorily received a distressed rival may exceed 30% but not exceed 49% of its charter capital,” the decree outlines.
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While the new cap does not apply to state-owned commercial banks, banks undergoing restructuring and mandatory transfer are eligible. These include MB Bank, HDBank and VPBank.
The cap had been in place to maintain domestic control and prevent excessive foreign influence. Individual investors from abroad were also subject to limitations and were allowed a 20% maximum stake per entity. According to October 2024 analysis by S&P Global, these caps were “holding back” the country’s banking sector.
“We believe that foreign ownership of Vietnam financial institutions will continue to be limited to minority stakes, with the possible exception of distressed financial institutions where the government might consider lifting foreign ownership limits. Overall, we believe M&A [mergers and acquisitions] will continue to be muted if these limits remain in place,” Ivan Tan, an S&P Global Ratings analyst, said at the time.
In the past, major Japanese banks have been some of the biggest investors in Vietnam’s banking sector. Mitsubishi UFJ Financial Groups hold a 19.73% equity stake in Vietinbank, Mizuho Financial Group holds a 15% interest in Vietcombank and Sumitomo Mitsui Financial Group owns 15.01% of VPBank.
In January, Vietnam’s central bank ordered two commercial banks to take over several underperforming banks (some of which were state-owned.)
“The compulsory transfer of weak credit institutions is one of the solutions to contribute to ensuring macroeconomic stability, national financial and monetary security, political stability and social order and safety,” the country’s central bank said at the time.
