Vietnam Expands Foreign Ownership in Banking: Key Opportunities for Investors

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes

Vietnam has taken a significant step in financial liberalization by increasing the foreign ownership cap in certain domestic banks from 30 percent to 49 percent. This policy change, introduced through Decree No. 69/2025/ND-CP, aims to attract foreign direct investment (FDI) and strengthen the country’s banking system.

The decree will take effect on May 19, 2025. The new cap applies to banks undergoing mandatory transfers and restructuring, including MB Bank, HDBank, and VPBank. These institutions are expected to benefit from increased capital inflows, technological advancements, and enhanced governance structures as foreign investors take on larger stakes.

Vietnam’s real GDP is projected to grow 6.8 percent in 2025 and 6.5 percent in 2026, according to the World Bank, further boosting investor confidence in the country’s financial sector. Additionally, credit growth is expected to reach 16 percent in 2025, as projected by the State Bank of Vietnam, underscoring the sector’s expansion potential.

For foreign investors, this represents an important shift, offering greater access to Vietnam’s fast-growing financial sector.

Evolving foreign ownership policies in Vietnam’s banking sector

Historically, Vietnam has imposed strict limits on foreign ownership in its banking industry. The previous 30 percent aggregate cap was implemented to maintain domestic control over financial institutions, prevent excessive foreign influence, and ensure economic stability. Additionally, individual foreign investors were subject to restrictions, with a maximum stake of 20 percent per entity.

By comparison, several ASEAN countries have been more open to foreign investment in banking. Singapore and Malaysia allow up to 100 percent foreign ownership, while Indonesia caps foreign stakes at 40 percent.

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The new Vietnamese policy brings the country closer to regional peers, making its financial sector more competitive and accessible to international investors. The banking sector’s current price-to-book (P/B) ratio stands at 1.1x, with an estimated return on equity (ROE) of 18 percent in 2025, indicating strong profitability and potential for investors.

Why Vietnam is opening up its banking sector

Vietnam’s decision to expand foreign ownership in the banking sector is driven by multiple financial and economic objectives.

Many Vietnamese banks require additional capital to meet Basel III compliance standards, particularly those undergoing restructuring. Increased foreign participation is expected to enhance the sector’s competitiveness by introducing global banking expertise, advanced technology, and improved risk management practices.

The policy shift also aims to attract higher levels of foreign direct investment, further integrating Vietnam’s financial system with global markets. Strengthening the banking sector is crucial for the country’s long-term economic growth, ensuring more efficient capital allocation and better credit availability.

Additionally, Vietnam’s banking market is projected to reach a net interest income of US$17.61 billion in 2025, driven by rising consumer demand and digital banking expansion. Recent restructuring efforts, such as VPBank acquiring GPBank and HDBank acquiring DongA Bank, highlight the government’s push toward a more robust financial system.

Transforming Vietnam’s banking landscape and investor considerations

The policy change is expected to transform Vietnam’s financial sector in several ways. The relaxed foreign ownership cap is likely to drive higher investments from global financial institutions, boosting the stability of participating banks. With foreign investors playing a more prominent role, governance structures may evolve, leading to improved transparency and corporate management practices.

International expertise may also result in more innovative banking products, better digital services, and an improved customer experience. However, domestic banks may face heightened competition from foreign-backed institutions, potentially driving industry-wide improvements in efficiency and service quality.

For investors looking to expand into Vietnam’s financial sector, the new policy presents significant opportunities, but also important considerations. The ability to acquire up to 49 percent in eligible banks offers greater control and influence in decision-making. Strategic partnerships with Vietnamese banks provide a gateway to long-term market presence and expansion.

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