Under Circular No 46/2018/TT-NHNN, which will take effect from March 1 this year, major shareholders of a CI and their relatives will not be allowed to hold more than 5 percent of charter capital in another credit institution from December 31, 2020.
Major shareholders and their relatives are also prohibited from increasing their stake holdings in any CI in any form, except for special cases regulated by the central bank.
In addition, CIs are not permitted to lend to major shareholders and their relatives after 90 days from the effective date of the new circular until shareholders meet regulations on holding less than 5 percent of another CI’s charter capital.
According to analysts, the favourable stock market and the country’s positive economic growth had helped some large banks, step up divestment from other financial institutions to meet the new regulation.
According to SBV Governor Le Minh Hung, the bank had directed and supervised CIs to resolve cross-ownership through share transfer and divestment and mergers and acquisitions in recent years, which had helped reduce cross-ownership significantly.
SBV data showed that the number of pairs of CIs with direct cross-ownership had decreased from seven in 2012 to one.
Direct share ownership between banks and enterprises also decreased from 56 pairs in June 2012 to four.
According to a SBV representative, who declined to be named, cross-ownership and the problem of dominant shareholder groups had basically been controlled but was not yet resolved. The main reason was that the settlement of cross-ownership was actually a matter of transferring shares, so the CIs, which were public companies and listed on the stock exchanges, needed a step-by-step implementation schedule to determine the time, price and suitable investors with an aim to ensure maximum benefits for both the CIs and the State./.
Source: VNA