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Vietnam may allow bigger foreign stakes in some banks

HANOI, Feb. 8 (Xinhua) -- Vietnam may change rules to allow foreign investors bigger stakes in certain local banks in a move to attract more investment inflows, newspaper Vietnam News reported on Wednesday, citing a draft proposal by the central bank.

Vietnamese banks, appointed by the central bank to handle weak lenders through merger and acquisition deals, are allowed to offer foreign investors up to 49 percent of their shares from the 30 percent ceiling, according to the proposal.

The change in foreign ownership limit is expected to support commercial banks and Vietnam Prosperity Joint Stock Commercial Bank (VPBank), which are either voluntary or compulsory to acquire troubled lenders with serious risks and management weakness, a Yuanta Securities analyst told the newspaper.

While some domestic banks have run out of room for more foreign ownership, other lenders are still struggling to raise foreign ownership.

Only banks with strong performance are allowed to ease their existing cap, Vietnam News quoted economist Vo Tri Thanh as saying.

Vietnamese banks see their share performance limited by the 30 percent ceiling imposed on foreign stakes, and they can reserve a maximum of 20 percent for foreign investment that is considered strategic in the banking sector.