Decree lifts foreign ownership cap   A customer conducts a transaction at HDBank on Tran Hung Dao in Ha Noi. A new decree now permits foreign strategic investors to hold up to 20 per cent of a credit institution. - VNA/VNS Photo Tran Viet HA NOI (VNS)- A single foreign strategic investor is now allowed to hold up to 20 per cent in a credit institution, an increase from the current 15 per cent. According to Decree 01/2014/ND-CP, issued late last week and to come into force on February 20, it is expected the decree will pave the way for foreign capital to flow into the banking sector. Previously, the holding of a foreign investor was capped at 15 per cent, or 20 per cent for exceptions that had to be approved by the Prime Minister. According to the decree, if not being a strategic partner, a foreign individual investor was allowed to own up to 5 per cent of a credit institution's charter capital, while a foreign organisation's maximum holdings could be 15 per cent. However, the decree regulated that the total stakes of foreign investors in a local credit institution could not exceed 30 per cent of the charter's capital, lower than the expectation of many banks at 49 per cent. In case of poorly-performing credit institutions which needed restructuring, the Prime Minister will decide on allowing the holdings of a foreign organisation or a foreign strategic investor which could exceed the limits, according to the decree. This would create the legal basis for the M&A in the banking sector, for example, the acquisition of a Singapore lender of Global Petro Bank (GPBank). The State Bank of Viet Nam's chief inspector, Nguyen Huu Nghia, told Dau Tu (Investment) on-line newspaper that the holdings of 20 per cent was preferential to foreign investors, as the maximum holdings of local investors was only 15 per cent. However, according to an analyst with Bao Viet Securities, Nguyen Xuan Binh, the increase of maximum holding of a foreign strategic partner to 20 per cent was still not very appealing to foreign investors, as they often wanted to purchase holdings of more than 30 per cent – which would help them have a voice in management. Binh was quoted by The Sai Gon Times as saying that the impact of the increase in foreign stakes in a credit institution would not be too large. The decree also set standards for a foreign investor to be eligible to become a strategic partner of a credit institution in Viet Nam. One of the standards pointed out that the investor must have operated at least five years in the financial and banking sectors and had minimum total assets of US$20 billion in the year preceding to the registry for buying a stake. In addition, if a foreign investor becomes a strategic partner of a credit institution, it would not be allowed that the foreign investor also owns more than 10 per cent of charter capital in any other credit institution in Viet Nam. - VNS