Foreign Ownership Limits – Banking Sector

DECREE 69/2025 ON ADJUSTING FOREIGN OWNERSHIP LIMITS

Decree 69/2025/NĐ-CP, recently issued by the Government and effective from May 19, 2025, adjusts the foreign ownership limits (FOL) in commercial banks involved in mandatory acquisitions of weak banks. Specifically, the total foreign ownership can exceed 30% but must not exceed 49% of the charter capital of these banks – except for commercial banks in which the State holds more than 50% of charter capital.

This regulation creates opportunities for joint-stock commercial banks such as MBB, VPB, and HDB – which have participated in mandatory acquisitions of weak banks – to increase their FOLs to 49% (VCB is not included in this list as the State Bank of Vietnam currently owns 74%). At present, foreign ownership in MBB stands at 22.3%, VPB at 24.3%, and HDB at 16.9%. Therefore, the increase in FOLs is not expected to be a strong short-term catalyst for the stock prices of these banks.

It is important to note that this increase in the FOLs is subject to each bank’s charter and is only applicable during the implementation period of an approved compulsory transfer plan, which is expected to last from 5 to 10 years. After this period, foreign investors will not be allowed to acquire additional shares until their total ownership falls below 30%, except for the case they purchase shares offered to existing shareholders or transfer shares among foreign investors.

Impact on MBB, VPB, and HDB

Decree 69/2025/NĐ-CP enables banks to issue additional shares to foreign shareholders if they need to raise capital to inject into weak banks, thereby accelerating the restructuring process. For example, MBB plans to contribute up to VND5,000 billion to MBV during the restructuring phase. We believe other banks will implement similar plans as part of the overall scheme to restructure weak banks. Additionally, increasing capital enhances the capital adequacy ratio (CAR), especially given that the acquiring banks are granted high annual credit growth quotas of 20–30%. Specifically:

• HDB, despite a relatively high CAR (~14%), relies heavily on Tier 2 capital bonds, so the bank may consider increasing Tier 1 capital to reduce the cost of funds.
• VPB also has a high CAR (~14%) and has not used much Tier 2 capital, so the need to raise capital is less urgent.
• MBB has a relatively lower CAR (~10%) and has not yet utilized Tier 2 capital, so it may need to raise capital in the future. However, its state ownership may pose a challenge as SOE shareholders are generally averse to dilution.