Banks to develop roadmap to comply with share ownership cap policy
According to the Law, which took effect from July 1 this year, institutional shareholders will need to lower the percentage of shares they hold in a credit institutions from 15 per cent to 10 per cent
Credit institutions will have to develop a roadmap to comply with the share ownership ratio regulation under the newly-issued Law on Credit Institutions.
According to the Law, which took effect from July 1 this year, 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 amendments are aimed at limiting and preventing cross-ownership and ownership that dominates the operations of credit institutions.
The State Bank of Vietnam (SBV), said it is drafting a circular to implement the new share ownership ratio regulation. The draft will require credit institutions, which have shareholders and related parties owning shares exceeding the regulated limit, to coordinate with the shareholders and related people to develop and implement a roadmap to ensure compliance with the regulation.
The draft circular states credit institutions will have to send their roadmap directly or via post to the SBV’s Banking Inspection and Supervision Agency, shareholders and related parties within 120 days. The credit institutions, organisations and individuals are the ones responsible for implementing that roadmap sent to the SBV.
If necessary, credit institutions can coordinate with related organisations and individuals to adjust the applicable measures and implementation date, but they must still ensure the compliance roadmap deadline.
According to the draft circular, the shareholders and related parties are not allowed to increase the number of shares held at the credit institution in any form, until they ensure compliance with the prescribed share ownership limit regulation, except in the case of receiving bonus shares or dividends in shares.
Also, they will not be permitted to receive cash dividends (if any) for the number of shares held exceeding the limit until they ensure compliance with the new ownership limit regulation.
From the effective date of this circular, credit institutions are not allowed to grant new credit to the shareholders and related parties.
In case a credit institution, shareholders and related parties, do not comply with the compliance roadmap, the SBV will consider and apply handling measures according to the provisions of law.
According to the SBV, it is challenging to enforce comprehensive regulations to address cross-ownership issues and requires an integrated approach, using national data on population and business registration and coordination between various governmental agencies.
Under a directive on the implementation of monetary policies in 2024, Prime Minister Phạm Minh Chính asked the Ministry of Public Security to coordinate with the SBV to develop measures to prevent and handle cross ownership and manipulation at credit institutions.
Scrutinising cross ownership and manipulation at credit institutions aims to ensure system safety, as well as financial and monetary security, the PM noted. — VNS
