Vietnam narrows limits on investors’ stakes in banks

Vietnam’s legislature reduced the maximum stake investors can own in domestic banks, in an attempt to mitigate the risk of market manipulation, Reuters reported on Thursday.

This regulatory adjustment has gained support from over 90 per cent of the National Assembly deputies, who anticipate that the stricter ownership limitations will prevent similar fraudulent activities in the future.

The new regulation counters the ongoing requests from foreign investors to eliminate or increase the existing 30 per cent cap on total foreign ownership of banks. The cap is not tweaked under the reform and it could stifle foreign investment.

The new rules also give more powers to Vietnam’s central bank to quickly intervene in case of large cash withdrawals from banks or when lenders show early signs of distress.