HANOI, March 16 (Reuters) – Vietnam’s central financial institution is searching for to cut back the utmost stake buyers can maintain in Vietnamese banks, in accordance with a broadcast draft doc on a regulatory change that will make the sector much less enticing to foreigners.
Underneath the proposal, printed by State Financial institution of Vietnam on its web site, particular person buyers could be allowed to carry as much as 3% of the shares of a credit score establishment, down from 5% at the moment.
The restrict for institutional shareholders, like funding or pension funds, could be diminished to 10% from the present 15%, however the draft proposal didn’t specify how lengthy buyers could be given to cut back their holdings to adjust to the decrease cap.
At the moment, the mixed stake of international buyers in a financial institution can not exceed 30%, whereas the cap for stakes in firms in lots of different sectors is about at 49%.
The central financial institution’s transfer to vary the possession limits follows a number of circumstances of fraud, together with one which led to a run on a financial institution {that a} outstanding actual property tycoon managed by way of nominees and his personal small holding.
In February, police in Vietnam opened an investigation into transactions made by international buyers regarding listed home lender Eximbank (EIB.HM) because it suspected the share worth had been manipulated, in accordance with paperwork seen by Reuters and sources. The end result of that probe is unclear.
The central financial institution stated its proposed modifications would scale back dangers of market manipulation.
A Bangkok-based fund supervisor who declined to be named as he was not authorised to speak to media, stated the decrease cap would affect international buyers extra as their holdings had been extra typically nearer to the present most.
Overseas buyers have repeatedly referred to as for the caps on possession to be raised, and they’re typically cited as a purpose why Vietnam continues to be labeled by index managers as a dangerous frontier market, depriving it of billions of {dollars} of funding.
Regardless of being an open financial system that depends on international direct funding in its industries and whose exports are as a lot as its gross home product, Vietnam has for years restricted foreigners entry to its fairness market.
The central financial institution additionally proposed a discount to the utmost {that a} financial institution can lend to a single borrower, reducing it to 10% of the financial institution’s fairness from 15% at the moment.
Analysts stated tighter caps on banks’ stake holders and borrowing might exacerbate liquidity challenges in Vietnam, at a time when the nation’s property builders are beneath stress.
Earlier this month authorities permitted regulatory modifications with a purpose to assist builders by extending bond maturities and permitting debtors to pay again in property.
The central financial institution additionally reduce rates of interest this week to spur development and scale back stress on debtors.
Reporting by Phuong Nguyen; enhancing by Francesco Guarascio and Simon Cameron-Moore
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