Vietnam International Bank or VIB has announced it will lower its foreign ownership limit from 20.5 percent to 4.99 percent. This is of interest in that the Commonwealth Bank of Australia currently owns 19.7 percent of the company.
It’s not clear what this might mean for the Commonwealth Bank nor why they bank made this decision.
Similarly, Vietnam’s HD Bank has also announced that it wants to lower its foreign ownership limit from 20 percent to 17.5 percent, which could suggest a trend is forming.
Of note, foreign ownership in banks is limited to 30 percent. Below this, foreign ownership limits are applied at the bank level and therefore can be raised or lowered, as long as they don’t exceed 30 percent, at the whim of the bank.
With this in mind, this move from VIB could be to give local shareholders greater control over what the Commonwealth Bank does with its stake–It will not be able to negotiate a sale with another overseas bank itself but rather will need to work through its local partners.
That said, it could also be that the bank wants to diminish the influence of foreign banks on its local operations. This wouldn’t be unusual–a number of foreign banks have dipped their toes in Vietnam’s banking industry only to find it to be a challenging environment in terms of its unique management practices that sometimes conflict with their own.