Foreign shareholding Vietnamese banks

On 20 April 2007, the Government of Vietnam passed Decree 69/2007/ND-CP on Purchase by Foreign Investors of Shareholding in Vietnamese Commercial Banks (Decree 69). Partner Bill Magennis and lawyer Julia Howes look at some of the key changes.

Bill Magennis, partner, and Julia Howes, lawyer, both at Allens Arthur Robinson

A much anticipated decree

The revision of regulations on foreign share purchases in Vietnamese shareholding banks, locally known as joint stock commercial banks (JSCBs), has been anticipated by foreign investors for a long time. The amendments were originally scheduled to be finalised by the end of June 2004 under Decision 109-2004-QD-NHNN of the State Bank of Vietnam, dated 30 January 2004. Despite taking a number of key steps in 2005 and 2006 by drafting and releasing the decree for public comment, the release of the final decree was delayed. Technical difficulties in drafting the document were not the cause: Decree 69 is a straightforward decree of only eight pages. However, political sensitivities, other changes to the banking regulatory framework and World Trade Organization accession have all played a part in the delay.