Bright door to foreign bank ownership

Value is ever increasing

The door to establishing a 100% foreign-owned bank in Vietnam is increasingly closing. The most recent license granted by the State Bank to a 100% foreign-owned bank was in 2017 (for United Overseas Bank - UOB). Establishing a branch of a foreign bank in Vietnam is also not simple. The most recent license to establish a foreign bank branch granted by the State Bank was in 2021 (for Kasikorn Bank).

Although some Korean banks in Vietnam have proposed being licensed to establish branches or convert into local legal entities, no further licenses have been granted so far.

According to Mr. Ngo Hoang Long, Director of VPBank Analysis Center, the possibility of granting full licenses to foreign banks in the near future is very unlikely. Currently, Vietnam has 9 100% foreign-owned banks and 50 foreign bank branches in operation. In fact, not only 100% foreign-owned banks but also domestic banks have not had any new licenses over the past 17 years. The last domestic joint stock commercial bank to be licensed was in 2018 (BAOVIET Bank).

However, Mr. Long said that the emergence of new generation digital banks, repositioning brands from banks subject to mandatory transfer (including MBV, Vikki Bank, VCBNeo), is creating a new legal corridor for foreign investors to participate in the banking sector in Vietnam.

According to the Law on Credit Institutions 2024, the foreign capital ratio in a domestic bank is limited to 30%. However, new-generation digital banks are not limited in foreign capital ownership because they are established in the form of a single-member LLC. This allows foreign investors to own 100% of the capital of new-generation digital banks without changing the law.

Thus, the forced transfer of four weak banks and the change in their operating form to a digital banking model have created a rare opportunity for foreign investors in the banking sector.

“We believe there is an ‘implicit commitment’ that the State Bank will not grant more licenses to pure digital banks in the near future, in order to protect the value of these new generation digital banks,” said VPBank analyst.

According to legal experts, a single-member LLC bank has only one owner and can sell 100% of its capital to foreign investors without being bound by the 30% ownership limit.

New generation digital banks such as MBV, Vikki Bank, VCBNeo... are creating a new legal corridor for foreign investors to enter the banking industry in Vietnam.

Vietnam's banking market still has a lot of room to grow.

The Vietnamese banking market has experienced several “waves” of foreign investment. The first wave occurred before 2012, when Basel’s minority investment regulations were not strictly applied and more financial institutions were willing to consider strategic investments. During this period, banks in Vietnam were mainly selected based on their growth potential, so many small banks were still able to attract strategic investors.

The second wave began in 2012, with the strong participation of large investors from Japan and Korea. These investors mainly focused on large banks in Vietnam. This was also the period when Vietcombank, VietinBank and BIDV were successful in attracting new strategic investors.

Currently, although there is still great interest from foreign investors in the Vietnamese banking market, they are still concerned about the regulation limiting the maximum foreign ownership ratio to 30%. Mr. Do Minh, Country Director of Warburg Pincus Investment Fund, shared that foreign investors want Vietnam to adjust the foreign ownership ceiling in the banking sector. According to him, the current ownership ceiling of 30% in Vietnam is much lower than that of countries in the region such as India (74%) or Indonesia (99%).

“If this ownership ratio is raised to 50%, the Vietnamese banking industry will have a major turning point in attracting foreign investment capital,” Mr. Minh commented.

Data from VDSC shows that as of March 13, 2025, there were 13 banks with foreign ownership ratios exceeding 15%, of which some banks were almost or completely full of foreign room. This shows that the opportunities for foreign strategic investors to participate in the Vietnamese banking system are currently quite limited.

However, M&A activities in the banking industry are expected to become increasingly vibrant, creating greater opportunities for foreign investors, especially when digital banks undergo mandatory transfer. In addition, opportunities for foreign investors will expand when some domestic banks are allowed to expand their foreign ownership room according to Decree 69/2025/ND-CP, amending Decree 01/2014/ND-CP on foreign investors purchasing shares of Vietnamese credit institutions.

Source: https://baodaknong.vn/cua-sang-so-huu-ngan-hang-ngoai-249155.html