However, the change did not apply to foreign banks, whose maximum stake in local banks remains capped at 10 percent. It also left unchanged the total foreign ownership ceiling of 30 percent in any Vietnamese bank.

The move comes amid a shake-up in the banking sector of communist Vietnam, a fast growing economy with an under-developed financial sector where only eight percent of the country’s 85 million people have bank accounts.

The new decree would help local banks expand after Vietnam’s entry into the World Trade Organization in January rang in a new era of stiff competition against foreign banking giants eager to do business here.

International banks such as London-based HSBC and the Australia and New Zealand Banking Group (ANZ) plan to set up new branches and expand services such as credit cards, personal loans and mortgages. The decree, issued Friday and published Saturday, said Vietnam would allow the “stake of a strategic foreign investor to increase from 10 percent to 15 percent of the legal capital of a Vietnamese commercial bank.”

However, it also said that “the stake of a foreign financial institution ... cannot exceed 10 percent of the legal capital in a domestic commercial bank.”

Under the new rules, the prime minister can, in special cases, raise the share limit for a foreign non-bank strategic investor to 20 percent, while non-strategic investors are limited to a five-percent stake.

The decree did not define who is considered a strategic investor and did not say when the changes would take effect.

Several foreign banks have recently bought 10-percent stakes in Vietnamese banks under deals that give them a market foothold while transferring capital and technical and managerial expertise to their local partners.

BNP Paribas has tied up with Orient Commercial Bank, ANZ joined with Sacombank, while regional giants Standard Chartered and HSBC partnered Asia Commercial Bank and Techcombank.

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