Analysis-Vietnam’s banks tap investors for $7 billion as economy runs red hot

Vietnamese banks are set to sell nearly $7 billion worth of shares as the booming economy fuels a demand for capital, offering foreign investors a chance to expand into the tightly regulated sector. Vietnam, with a robust banking industry, restricted foreign ownership at 30% and individual stakes capped at 20%, has undergone a more open approach in recent months.

Central leader To Lam's push for substantial infrastructure spending has encouraged policymakers to embrace greater foreign participation to meet growing credit demands amid a domestic funding shortage. Bank share sales may raise nearly $7 billion by the end of next year, based on Reuters calculations and a Fitch Ratings report, marking Vietnam's largest-ever wave of capital raisings by lenders.

Three local banks, including HDBank, Vietcombank, and BIDV, have been granted higher foreign ownership limits of up to 49%, while other banks are planning to issue shares to foreign investors. Foreign lenders are attracted by Vietnam's growing consumer market and financial gains, with Japan's Sumitomo Mitsui Banking Corp and Mizuho Bank potentially increasing their stakes.

Fitch's Willie Tanoto sees potential tie-ups with smaller banks as Vietnam sustains its growth story, while the government anticipates stricter global Basel III requirements by 2030, driving the need for capital.