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Banking & Finance

Foreign investors in weak banks must commit long term

Released at: 09:31, 12/12/2014

Foreign investors in weak banks must commit long term

SBV seeks detailed plans from foreign investors planning to buy stakes in weak banks.

by Yen Thanh

From February 1, 2015, foreign investors who are looking at purchasing shares in Vietnam’s weaker banks will be asked to provide a written commitment that their investment will be long term, under Circular No.38 issued on December 8 by the State Bank of Vietnam.

The new circular states that foreign investors must prepare a detailed purchasing plan and a restructuring strategy for the bank. The SBV require scenarios on reorganizing the banks’ network, increasing financial capacity, managing bad debt ratios, strengthening administration and management activities, applying modern technology, developing services and products, and corrective action to resolve immediate problems.

The SBV will consult with the Ministry of Finance regarding information relating to the foreign investor’s identification, securities law, ownership, investment situation, and the relationship between foreign investors and the individual who proposes offers from the bank.

Institutional investors must confirm they will acquire at least 10 per cent of the bank’s charter capital. The PM will decide on the proportion of shares to be owned by foreign investors after receiving an evaluation from SBV.

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