New regulations on purchase of shares in Vietnamese credit institutions by foreign investors take effect from today

From May 19, 2025, Decree No. 69/2025/ND-CP amending and supplementing the Government's Decree No. 01/2014/ND-CP on foreign investors buying shares of Vietnamese credit institutions (CIs) officially takes effect. This is an important adjustment step to attract foreign capital, support the restructuring process of the banking system, and at the same time ensure the safety and stability of the national financial system.

Foreign investors attended the investment conference organized by the Government. 

Source: Online Government News. 

This article will deeply analyze the outstanding innovations in Decree 69/2025/ND-CP, thereby assessing the practical impact and making some recommendations for stakeholders.

1. Context of promulgation and reasons for amending Decree 01/2014/ND-CP

Decree 01/2014/ND-CP was born in the context that Vietnam is gradually opening up the financial and banking market to the world. However, after more than 10 years, many provisions in this decree are no longer in line with the current legal system, especially after the Law on Investment 2020, the Law on Securities 2019 and the Law on Credit Institutions (CIs) were amended and supplemented.

In addition, in order to effectively implement the Scheme on restructuring the credit institution system associated with the handling of bad debts in the period of 2021–2025, it is necessary to have more breakthrough mechanisms to attract foreign strategic investors, especially in compulsory transfer deals (CGBB) between banks.

Accordingly, the State Bank of Vietnam (SBV) has submitted to the Government for promulgation Decree 69/2025/ND-CP with key amendments and supplements, creating a stronger legal corridor for foreign investment activities in the banking sector.

2. Outstanding new contents in Decree 69/2025/ND-CP

2.1. Clearly define the concepts of "foreign organization", "foreign investor" and "weak and difficult credit institution"

Decree 69 amends the regulation of "foreign organization" in a more concise and easy-to-understand way than "an organization established under foreign law, carrying out business investment activities in Vietnam". From the introduction of a new definition of foreign organizations, Decree 69 has redefined the criteria of "Foreign investors" in a strict and synchronous direction with the Law on Investment, in order to better control the indirect control of foreign investors in Vietnamese credit institutions.

Accordingly, foreign investors include:

• Legal entities established under foreign laws doing business in Vietnam;
• Foreign-invested organizations with more than 50% of charter capital directly or indirectly owned by foreign investors[1];
• Foreign individuals.

This regulation helps limit the situation of "circumventing the law" through intermediary legal entities established in the country to avoid foreign ownership restrictions, and at the same time protect financial sovereignty in key sectors of Vietnam.

From the full and easy-to-understand determination of the criteria of foreign investors, Decree 69 has supplemented the method of calculating the total share ownership of foreign investors as the total share ownership of 3 subjects, including: foreign individuals, foreign organizations and foreign-invested economic organizations.

A prominent new point of Decree 69 is to provide specific criteria to identify weak and difficult credit institutions. Accordingly, a credit institution is considered weak and difficult when it falls into one of the following three cases: (1) The credit institution is under special control by the State Bank of Vietnam; (2) Commercial banks are compulsorily transferred; (3) The credit institution is rated "weak" according to the latest results of the State Bank of Vietnam.

2.2. Relaxation of the ceiling on foreign ownership at banks subject to compulsory transfer

This is the most breakthrough content and is of special interest to investors. According to the new regulations:

The Government can allow foreign investors to own up to 49% of charter capital in credit institutions to receive compulsory transfers, instead of the 30% limit as before.

However, this condition does not apply to state-owned commercial banks (holding more than 50% of charter capital) and is only implemented when the Government approves the CGBB plan.

This flexible mechanism aims to attract strategic investors to participate in restructuring the banking system, increasing charter capital, improving governance capacity, technology transfer and financial support for weak credit institutions.

2.3. Strictly regulating forms of share purchase by foreign investors

According to the amended provisions of Decree 69, foreign investors are entitled to purchase shares in Vietnamese utility organizations in the following forms:

• Foreign investors buy shares of shareholders of joint-stock credit institutions.
• Foreign investors purchase shares in case the credit institution converts its legal form into a joint-stock credit institution.;
• Foreign investors purchase shares in case the credit institution offers shares, issues shares to increase charter capital or sells treasury shares purchased by the credit institution before January 1, 2021

The third form above is a newly amended regulation to clarify Decree 01/2014. This regulation further clarifies Decree 01/2014 on foreign investors being allowed to buy shares of Vietnamese credit institutions when these organizations issue shares, offer new shares or sell treasury shares, however, these treasury shares have been repurchased before the effective date of the Securities Law 2019 and there is a prohibition on companies the public buys back treasury shares.

The State Bank of Vietnam

3. Practical impact of the new regulation

3.1. Promoting the restructuring of the banking system and attracting investment

As of May 2025, there have been 4 joint-stock commercial banks (joint stock commercial banks) participating in the transfer of weak banks, including 3 non-State commercial banks and 1 State bank holding over 50% of charter capital. The SBV's CGBB decisions are an important step forward and create a strong motivation to deal with "blood clots" in Vietnam's banking system in the coming time. The new regulation to increase the ownership ceiling for foreign investors in compulsory transfer activities can attract more international credit institutions and major investors in the world to have more motivation to invest in Vietnam's financial and banking sectors. When there is the participation of the world's leading banks in the Vietnamese market, it will be an opportunity for us to promote the restructuring of the banking system, which has fluctuated greatly in recent years.

3.2. Limit reversal risks and impact on currency security

Although it is open, Decree 69 still shows the necessary caution of the Government and management agencies when:

• It is clearly stipulated that the extension of "room" only applies to the CGBB plan;
• Do not expand rampantly to all commercial banks.

The reason is that it has been proven in the past, some foreign investors (especially from Europe) withdraw capital from Vietnamese banks when economic fluctuations occur, causing a wave of divestment, affecting the stability of the banking system.

In addition, according to the "Ratchet" mechanism[2] of the CPTPP, if Vietnam expands the share ownership limit for foreign investors, it will not be possible to adjust it down later. Therefore, "controlled opening" is a necessity that the Vietnamese Government has carefully considered when promulgating this Decree.

The promulgation of Decree 69/2025/ND-CP opens up a great opportunity to attract foreign investment capital to the banking sector – which is a sensitive and highly controlled sector. The adjustments in the Decree show Vietnam's initiative in financial integration, while still ensuring system safety.

However, the door that opens also comes with higher requirements for risk control, choosing the right partner and closely monitoring the implementation practice. This is a problem of balancing development and stability, between integration and protection – requiring actors to act cautiously but flexibly to make good use of the new policy that takes effect today, May 19, 2025.