Vietnam’s banks tap investors for US$7bil as economy grows rapidly

Vietnam's banking sector is set to raise nearly US$7 billion through share sales as the rapidly expanding economy fuels demand for capital, Reuters reports. With one of Asia's fastest-growing banking industries, Vietnam's banks have traditionally had restrictions on foreign ownership, capped at 30% for cumulative ownership and 20% for individual stakes.

However, in recent months, top leader To Lam's push to boost economic growth with major infrastructure projects has led to a more open approach, with policymakers seeing foreign participation as crucial to meet growing credit demand amid domestic funding constraints. This has led to an increase in bank share sales, with potential for nearly US$7 billion by year-end, according to Reuters calculations based on public disclosures and a Fitch Ratings report.

The country's foreign borrowing limit has also been raised by 11% to US$6.1 billion and could rise further. Three local lenders have been granted permission to increase their foreign ownership limits to 49%, while stock-market reforms have secured Vietnam's emergence as a top emerging market index. The government is also exploring offshore sovereign bond sales and considering new rules to allow large municipalities to tap international capital markets.