State-run companies’ investments in banking, insurance and securities limited at 10%: draft

Investments of state-run groups and corporations in industries of finance, banking, insurance and securities will be limited at no higher than 10% of chartered capital of the units receiving the capital contribution.

Investments of state-run groups and corporations in industries of finance, banking, insurance and securities will be limited at no higher than 10% of chartered capital of the units receiving the capital contribution instead of the current of 20%, according to a draft decree on investment and business of state capital in enterprises that Ministry of Finance is building and consulting the relevant units.

The finance ministry said that according to this draft decree, state-owned enterprises (SOEs) are still allowed to invest in non-core sectors. However, with the high risks and sensitive fields like finance, banking, insurance and securities, SOEs are allowed to set up one subsidiary in each sector.

The investment capital in each sector will not exceed 10% chartered capital of units receiving the capital contribution. The draft also stated that if in one group, the holding company and its subsidiaries jointly contribute capital; the total combined capital contribution will not exceed 15% equity of the organization receiving the capital contribution. In special cases, enterprises must submit for the Prime Minister’s consideration and decision.

Under the current provisions, SOEs are permitted to invest maximum 30% of the total investment in non-core sectors. Particularly, the capital contribution to finance, banking, insurance and securities is not exceeding 20% of chartered capital of the organization receiving capital contribution. The capital contribution of both holding company and its subsidiaries is not exceeding 30% equity.

Source Vietbiz24.com

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial