There are still cases that State-owned enterprises (SOEs) hold a share higher than the permitted ratio in banks, and banks are facing difficulties in requiring the shareholders to divest the shares, Governor of the State Bank of Vietnam (SBV) Nguyễn Thị Hồng has said.

In a report recently sent to the National Assembly, the Governor said that in recent years, the SBV continued to improve the legal basis and resolutely implemented solutions to prevent and handle cases that hold bank shares higher than the permitted ratio. Specifically, the 2024 Law on Credit Institutions supplements many regulations on strengthening the prevention of cross-investment, cross-ownership and manipulative ownership in credit institutions.

According to the current regulations, the share ownership cap by an institutional shareholder in a credit institution is reduced from 15 per cent to 10 per cent and for an individual and his/her related parties from 20 per cent to 15 per cent.

The cross-ownership between credit institutions and related persons of credit institutions contributing capital and purchasing shares at other credit institutions has so far decreased significantly.

Shareholders and related persons owning shares exceeding the prescribed cap are mainly in State-owned enterprises and corporations, which need to be continually handled in order to force them to concentrate their capital on their core business activities and use capital more effectively.

According to the SBV, cases which currently own shares in banks fairly higher than regulated are State-owned enterprises. The banks have difficulty in requesting the shareholders to divest capital.

The SBV also admitted that the work of unveiling, preventing and handling cross-ownership and manipulation in credit institutions faced many difficulties though current legal regulations had been designed to prevent cross-ownership and manipulation in banks, as some cases could still circumvent the laws to hold bank shares higher than the permitted ratio.

Specifically, it is very difficult to unveil the cross-ownership violation in cases whereby an individual, who is the bank’s existing shareholder, can circumvent ownership regulations by asking someone else to hold more shares of the bank and to have 'name' on paper, but in fact the individual is the real owner, according to SBV.

To detect and prevent cross-ownership, the SBV said that moving forward, it would continue to monitor the safety of credit institutions' operations, and inspect capital, share ownership, lending, investment and capital contribution of credit institutions to timely detect risks and violations, and direct the institutions to handle them.

Lawyer Trương Thanh Đức, Director of the ANVI Law Firm, also believes no matter how strict the law is, the most important step is implementation and supervision.

According to Đức, whether the law is strict or loose, the most important thing is that banks, shareholders and customers must respect and follow the principles and standards. In addition, inspection and supervision of management authorities must be strengthened to ensure the effectiveness and validity of the law. — BIZHUB/VNS

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