Vietnam Lifts Bank Ownership Cap – A New Opening for Foreign Investors

Policy Shift: Foreign Stake Raised to 49%

Vietnam has raised the foreign ownership cap in certain private banks from 30% to 49%. This change, enacted via Decree 69/2025/ND-CP effective May 19, 2025, targets banks undergoing restructuring or mandatory transfers (such as MB Bank, HDBank, and VPBank). By allowing nearly half ownership, the government aims to attract more foreign direct investment (FDI) to bolster bank capital, improve governance, and introduce advanced technology in the sector. These banks have recently taken over weaker lenders as part of a broader industry cleanup, and the policy rewards them with greater access to international funding.

Stacks of Vietnam’s ₫500,000 banknotes symbolize the capital influx now possible as foreign investors can own up to 49% of local banks. This policy change is designed to inject substantial new funds into Vietnamese banks, strengthening their balance sheets for growth.

Growth Outlook: Robust Economy and Banking Sector

The timing of this liberalization aligns with Vietnam’s strong economic outlook. The World Bank projects Vietnam’s GDP to grow about 6.8% in 2025, signaling healthy economic momentum. Credit expansion is likewise upbeat – the State Bank of Vietnam targets roughly 16% credit growth in 2025 – which should fuel bank lending revenues. Vietnam’s banks are expected to remain highly profitable, with the sector trading around 1.1× book value and an 18% return on equity projected in 2025. For investors, these metrics indicate attractive valuations and the potential for strong returns as the banking industry expands alongside the economy.

Regional Context: Closing the Gap with Peers

By lifting the cap, Vietnam is catching up to regional peers in openness. Its previous 30% foreign ownership limit was low compared to other Southeast Asian markets. (For instance, Singapore and Malaysia permit up to 100% foreign ownership in banks, and Indonesia allows around 40%.) The new 49% threshold brings Vietnam’s policy more in line with the region, making its banking sector more competitive and accessible to global investors. Crucially, the additional foreign capital will help Vietnamese banks meet Basel III capital standards and adopt international best practices. Regulators expect that partnerships with foreign stakeholders will introduce global expertise, strengthen risk management, and accelerate digital transformation in banking. In short, Vietnam is signaling that its financial sector is “open for business” and committed to modernizing in step with global norms.

Investor Benefits: Influence and Long-Term Gains

For foreign investors, this policy shift opens the door to greater influence and participation in Vietnam’s high-growth banking market. Owning up to 49% of a local bank (versus the previous one-third limit) means a larger say in strategic decisions and corporate governance. Such significant stakes enable deeper partnerships – investors can collaborate on new products, technology upgrades, and management improvements, enhancing long-term value. Recent bank restructurings (e.g. VPBank’s acquisition of GPBank and HDBank’s takeover of DongA Bank) have cleaned up bad assets and paved the way for stronger performance. Now, fresh foreign capital and expertise can build on these improvements. Investors entering Vietnam’s banking sector gain exposure to a fast-growing economy, robust credit demand, and a banking industry with rising profitability. With improved transparency and digital innovation on the horizon, the potential for strong returns and dividends is compelling. Overall, Vietnam’s higher foreign ownership cap presents an exciting opportunity to invest in a reforming, expanding market poised for sustained growth.

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Source: Vietnam Insider