Prime Minister Nguyen Tan Dung has instructed the State Bank of Vietnam (SBV) to consider allowing commercial banks to sell up to 20 percent of their charter capital to a single foreign strategic investor.

Vietnam currently caps foreign ownership by a single strategic investor of a commercial bank at 15 percent. However, some Vietnamese banks have sold 20 percent of their charter capital to foreign strategic investors under prime ministerial approval.

HSBC owns a 20 percent stake in Techcombank, MayBank of Malaysia owns 20 percent of An Binh Bank, and Societe Generale SA of France owns 20 percent of SeAbank.

Other banks have reached the cap in foreign ownership. Southern Bank has sold 15 percent to United Overseas Bank (UOB) of Singapore, pending a 20 percent increase, Standard Chartered Bank holds 15 percent of Asia Commercial Bank, and Sumitomo Mitsui Financial Group of Japan holds 15 percent in Eximbank.

Meanwhile, Deutsche Bank (Germany) has acquired 10 percent of Habubank, and International Finance Corporation has a 10 percent stake in Vietinbank.

The move is part of a series of measures designed by the Government to tighten the management of the foreign exchange market.

The SBV has also been instructed to reduce the maximum amount of US dollars that an individual is allowed to leave the country with, without making a customs declaration, to $5,000 from $7,000.

The bank will also issue new regulations under which economic groups, general corporations and subsidiaries of state-owned companies will have to sell dollars to commercial banks.

Foreign reserves have slid from a level of nearly $24 billion at the end of 2008 to only about $12 billion earlier this year, about 1.9 months of import cover, some foreign financial institutions have estimated.

Modifications to the existing Decree No.202, issued in 2004, are also expected in an attempt to curb the gold trade. The decree covers breaches in the management of trading foreign currencies and gold.

The Ministry of Planning and Investment was told to strictly control the granting of licenses for gold businesses, and to revoke licenses in the case of violations of forex and gold trading regulations.

In June, the central bank will release a circular outlining the management of foreign currencies and the lending and collecting of overseas debt by credit institutions.

In the third quarter, the Bank will submit a new decree to replace Decree No134, issued in 2005, regarding how much debt corporations are allowed to get into without government guarantee, especially for state groups and general corporations.

The Ministry of Industry and Trade and relevant agencies are going to set up a group in charge of examining and supervising US dollar loans and repayment, according to the proposed portfolio of the ministry.

Source: VNA