Ownership structure and financial performance of joint stock commercial banks with the state ownership of over 50% charter capital in vietnam

Le Van Luyen GRADUATION THESIS OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE OF JOINT-STOCK COMMERCIAL BANKS WITH THE STATE OWNERSHIP OF OVER 50% CHARTER CAPITAL IN VIETNAM Hanoi, Ma

BANKING ACADEMY OF VIETNAM

FACULTY OF BANKING

- -

Student Class Academic year Student ID

Supervisor

: Pham Ngoc Nguyet Minh : K21CLCA

: 2018 – 2022 : 21A4010886

: Assoc Prof Dr Le Van Luyen

GRADUATION THESIS

OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE

OF JOINT-STOCK COMMERCIAL BANKS WITH THE STATE OWNERSHIP OF OVER 50% CHARTER CAPITAL IN VIETNAM

Hanoi, May 2022

Tai ngay!!! Ban co the xoa dong chu nay!!! 17014128223961000000

BANKING ACADEMY OF VIETNAM

FACULTY OF BANKING

- -

Student Class Academic year Student ID

Supervisor

: Pham Ngoc Nguyet Minh : K21CLCA

: 2018 – 2022 : 21A4010886

: Assoc Prof Dr Le Van Luyen

GRADUATION THESIS

OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE

OF JOINT-STOCK COMMERCIAL BANKS WITH THE STATE OWNERSHIP OF OVER 50% CHARTER CAPITAL IN VIETNAM

Hanoi, May 2022

i

DECLARATION

I hereby reassure that this thesis is totally my intellectual creation, which I completed with the help of the supervisor It has never been used in any prior application for a degree, in full or in part Wherever contributions of others are involved, every effort is made to indicate this clearly, with due reference to the literature, and acknowledgement

of collaborative research and discussions

Hanoi, May 2022 Signature

Pham Ngoc Nguyet Minh

ii

ACKNOWLEDGEMENTS

First of all, I would like to express my deep and sincere gratitude to my supervisor,

Mr Le Van Luyen (Assoc Prof Dr.), for helping me in the process of the research and providing invaluable guidance throughout my research Mr Luyen has made suitable suggestions and detailed comments to make my article as complete as possible It was a great privilege and honor to work under his guidance

Secondly, I also take immense pleasure in thanking all the lecturers in Banking Faculty at Banking Academy for their lessons and expensive experience during the past four years of my student life as well as the Management Board of Advanced Program for their great care and support for students I wish to thank the lecturer Mr Le Hai Trung, although I was not directly taught by him, his willingness to impart his knowledge inspired me to conduct this thesis paper

Thirdly, I would also want to send my gratitude to all of my lovely friends Thank you to the sisters in C1-107 for the happy days of living together filled with laughter Especially, I would like to express my sincere thank to my best friend forever, Phuong Anh for our 10-year friendship, thank you for always being there, caring and supporting

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDGEMENTS ii

LIST OF ABBREVIATION v

LIST OF TABLES vi

LIST OF FIGURES vi

INTRODUCTION 1

1 Research problem: 1

2 Research objectives: 3

3 Subject and scope: 4

4 Research method: 4

5 Value of the study: 4

6 Research structure: 5

CHAPTER 1: LITERATURE REVIEW OF RELATIONSHIP BETWEEN OWNERSHIP STRUTURE AND BANK FINANCIAL PERFORMANCE 6

1.1 Theoretical basis: 6

1.1.1 Relationship between ownership structure and firm performance: 6

1.1.2 Relationship between ownership structure and bank financial performance: 12

1.2 Emprical research papers: 18

CHAPTER 2: REAL SITUATION OF OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE OF JOINT-STOCK COMMERCIAL BANKS WITH THE STATE OWNERSHIP OF OVER 50% CHARTER CAPITAL IN VIETNAM FOR THE PERIOD 2009-2021 29

2.1 Overview of ownership structure and financial performance of Vietnamese commercial banks: 29

2.1.1 Regulations related to ownership structure in the Vietnamese banking system: 29

2.1.2 Overview of the ownership structure of Vietnamese commercial banks: 34

2.2 Real situation of the impact of ownership structure on the financial performance of

Vietnamese joint-stock commercial banks with the State ownership of over 50% charter capital: 39

2.2.1 The process of equitization of Vietcombank, Vietinbank and BIDV: 39

2.2.2 Financial performance of three Vietnamese Joint-stock Commercial banks with the State ownership of over 50% charter capital: 42

2.2.3 Evaluation of the financial performance of Vietnamese Joint-stock Commercial banks with the State ownership of over 50% charter capital in relation to ownership structure: 51

CHAPTER 3: EVALUATE THE IMPACT OF OWNERSHIP STRUCTURE TO FINANCIAL PERFORMANCE OF JOINT-STOCK COMMERCIAL BANKS WITH THE STATE OWNERSHIP OF OVER 50% CHARTER CAPITAL IN VIETNAM FOR THE PERIOD 2009-2021 54

3.1 Research hypothesis: 54

3.2 Research model: 57

3.2.1 Regression model: 57

3.2.2 The variables selection: 57

3.2.3 Data collection and Research methodology: 60

3.3 Results and Discussion: 61

3.3.1 Summary statistics: 61

3.3.2 Regression results: 62

3.3.3 Discussions: 67

CHAPTER 4: RECOMMENDATIONS 71

4.1 Recommendations for State management agencies: 71

4.2 Recommendations for bank administrators: 75

GENERAL CONCLUSIONS 78

REFERENCES 81

APPENDICES 91

CEO Chief Executive Officer

EPS Earnings Per Share

FEM Fixed Effects Model

FGLS Feasible Generalized Least Squares GMM Generalized Method Of Moments

HOSE Ho Chi Minh Stock Exchange

IPO Initial Public Offering LDR Loan-To-Deposit Ratio

M&A Mergers and Acquisitions

NIM Net Interest Margin

OLS Ordinary Least Square

REM Random Effects Model

SBV State Bank Of Vietnam

VIF Variance Inflation Factor WTO World Trade Organization

LIST OF TABLES

Table 2.1: Regulation of share ownership rate for foreign investors in joint-stock

commercial banks in Vietnam

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Table 2.2: Changes in some indicators before and after the equitization of BIDV,

Vietinbank and Vietcombank

2021

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Chart 2.6: NIM of BIDV, Vietinbank and Vietcombank over 2018-2021 48

in their famous study mentioned the separation between ownership and management rights and emphasized the ownership structure and performance of corporations in the America Based on that, Jensen & Meckling (1976) developed Agency Theory, stating the conflict of interest arising between owners (shareholders) and business managers Management may be pursuing personal goals rather than focusing on maximizing benefits for the business or the goal of making profits for business owners There are principles and governance practices in place to control asymmetric information conflicts between executives and company shareholders Ownership structure, as an important mechanism in corporate governance, aims to orient managers to work for shareholders' goals instead of self-interest, creating conditions to improve firm operational efficiency

On that basis, there have been many studies investigating and evaluating the relationship between ownership structure and performance of different types of enterprises, which it

is impossible not to mention studies in the field of the banking sector

The banking industry, as a financial intermediary, is considered the backbone of the whole developing economy Through the good performance of its functions: Creating opportunities to access idle capital for businesses, and effectively implementing monetary policy; banks are increasingly asserting their essential role in the development

of any economy Since its establishment until now, Vietnam's banking industry has undergone great changes and achieved certain achievements, making positive contributions to socio-economic development In the late 1980s, along with the

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transformation of the country's economy from a centrally planned mechanism to a socialist-oriented market mechanism, the banking industry also gradually innovated Vietnamese banking sector switched from one-tier model to two-tier model with the State Bank of Vietnam acting as the state-level manager and four state-owned banks including the Agricultural Development Bank, Bank for Industry and Trade, Bank for Investment and Construction, and Bank for Foreign Trade The system of Vietnamese credit institutions has gradually been consolidated and improved its operational capacity based on perfecting the banking sector's legal framework and flexible economic policies

in line with the development of the times Until now, in addition to the increase in the number and quality of services as well as the size of the banking network, the emergence

of new types of banks or it is the diversification in the ownership structure that is the most remarkable point in the development of the Vietnamese banking system If initially the finance-banking industry was owned by the State, now there has been the presence

of the private and foreign sectors, with the banking industry, there are new types of banks such as Joint-stock commercial banks, joint venture banks, banks with 100% foreign investment capital In the context of developing the country's economy according to the market mechanism, the diversity of ownership types is both an opportunity for the banking industry to integrate internationally and poses challenges in the management of the authorities as well as governance in the bank

In the past 20 years, restructuring the composition of the economy in general and the banking system in particular, has been a matter of concern and research by State management agencies and banking administrators In the 2000s, the Government proposed to equitize state-owned commercial banks With a lot of effort from the bank itself and the support from the State Bank, in December 2007, Vietcombank made its initial public offering, 1 year later Vietinbank and 4 years later, BIDV has just conducted

an IPO However, up to now, together with Agribank, these banks are still an effective arm for SBV to implement the country's macro goals and play a pivotal role in the banking industry, leading the financial market in Vietnam

2 Research objectives:

The main objective of the study is to understand the impact of ownership structure

on the financial performance of Vietnamese Joint-stock Commercial banks with the State ownership of over 50% charter capital To achieve this great goal, the thesis addresses the following specific objectives:

- Explain the basis for forming the relationship between ownership structure and performance of banks

- Analysis of the current state of ownership structure at three Vietnamese stock Commercial banks with the State ownership of over 50% charter capital and the performance of these banks

Joint Building a quantitative model to study the degree and dimension of influence of each type of ownership structure on the business performance of Vietinbank, Vietcombank and BIDV; Compare the results obtained with the theory and previous studies

- On the basis of research results, make appropriate recommendations for managers

to improve the financial performance of three joint-stock commercial banks with the State ownership of over 50% charter capital in Vietnam

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3 Subject and scope:

- Subject: Vietnamese Joint-stock Commercial banks with the State ownership of over 50% charter capital: Vietcombank, Vietinbank, BIDV

- Scope of the study:

+ Time: the period of 13 years from 2009 to 2021

+ Data sources: audited financial statements, annual reports of BIDV, Vietinbank and Vietcombank

4 Research method:

To assess the impact of ownership structure on the financial performance of Vietnamese joint-stock commercial banks with the State ownership of over 50% charter capital, the study employs the combined model of all observations (Pooled OLS) and the feasible general least squares regression (FGLS) Using panel data based on the synthesis and analysis of statistics from financial statements of commercial banks and state databases, the study can build a model of quantitative research to evaluate the above relationship

5 Value of the study:

There have been several research papers in Vietnam on the relationship between ownership and commercial bank performance, such as Ha et al (2006), Son et al (2014), Huan et al.(2019) and Phong & Tuan (2020), Among these studies, there were a few papers mentioned but not primarily focused on analyzing commercial banks with State dominance Meanwhile, up to now, besides Agribank, three banks including BIDV, Vietinbank, and Vietcombank, still play an essential and indispensable role in Vietnam's financial sector On the basis of new changes in the development of banks, closely following the regulations issued by the State, the study has implemented a model to evaluate the impact of ownership structure on the financial performance of Vietnamese joint-stock commercial banks with the State ownership of over 50% charter capital The findings are intended to help policymakers, who will be able to utilize them to draft ownership laws, paving the way for the bank's future growth Banks are also

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advised to take steps to control expenses and boost income, therefore increasing their financial capabilities Given the present regulations and market conditions discussed in this article, non-state investors in these banks may also find the material valuable Researchers might use the outcomes of this thesis as a reference for further studies It also provides other literature related to the study topic that has been investigated by other scholars

Joint-Chapter 3: Evaluate the impact of ownership structure to financial performance of Joint-stock Commercial banks with the State ownership of over 50% charter capital in Vietnam

Chapter 4: Recommendations

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CHAPTER 1 LITERATURE REVIEW OF RELATIONSHIP BETWEEN OWNERSHIP

STRUTURE AND BANK FINANCIAL PERFORMANCE

1.1 Theoretical basis

1.1.1 Relationship between ownership structure and firm performance

1.1.1.1 Company ownership structure

The sources of charter capital, which determine the firm's ownership structure, are the foundation for establishing and operating a business On that basis, we can understand the enterprise's ownership structure as a structure that reflects the totality of ownership relationships for parts of equity, allowing us to determine other relationships

in product production and distribution, as well as the economic benefits that the production and business from that equity source brings

The structure of ownership can be defined from two points of view The former refers to the degree of ownership concentration, expressed in terms of the largest owner's shares, subject to absolute risk and custodial costs The latter argued that ownership structure is the distribution of equity by voting rights, source of capital, and shareholder identity

Each characteristic of centralized or dispersed ownership has a significant impact on the enterprise's future governance structure In a centralized ownership structure, the company's ownership and control are concentrated in the hands of a few individuals and families, management, or lending institutions As a result, the internal system is generally referred to as the centralized structure They may not own the entire capital, but have significant voting rights, allowing them to dominate the way the company operates Insider-controlled firms benefit from having a centralized ownership structure These people have the authority and motivation to keep a careful eye on the firm, thereby decreasing the risk of errors or fraud in management and administration Furthermore, these individuals prefer to maintain their invested cash in the firm for a long period due

to their substantial ownership and control rights As a result, they will prioritize actions

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that improve long-term success over decisions with short-term benefits However, this system also leads to managerial failures in enterprises When executives are major shareholders or have significant voting rights, they can use their power to sway the Board

of Directors' decisions in their favor More significantly, they might profit from secret knowledge through insider trading This has had a significant impact on the enterprise's performance, which is the fundamental cause of the corporate governance process

An entity with a dispersed ownership structure has numerous shareholders, each of whom owns a number of shares in the firm The board of directors has authority over the company's activities Small shareholders have little motivation to keep a close eye on the business and do not desire to be involved in its management The manager of the company's operations does not have to contribute equity under the distributed structure system, so the management is relatively separate from the economic benefits they receive However, this system has the disadvantage that small shareholders are less motivated to participate in the management of the company, easily divest, and tend to favor decisions that bring short-term benefits

Ownership identities come in different types such as family, government, foreign, institutional, etc., but institutional and management stakeholders have a higher level of control over corporate policies than other types According to Holderness (2009), the ownership structure might take the form of the State, which is entrusted with resources For example, when a company has direct state ownership, it works toward achieving that company's political goals with a limited focus on a minority of shareholders Institutional ownership occurs when huge institutions hold the majority of the company When a foreign company owns a major portion of a company, this is known as foreign ownership, similarly to family ownership Conflicts of interest will be reduced as a result

of the overlap in control and ownership, leading to greater business value Conflicts between shareholders and management, lenders and shareholders are examples of possible conflicts They also illustrate that the percentage of shares owned by the aforementioned categories of ownership may be used to determine ownership structure

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1.1.1.2 Company’s financial performance

If operational efficiency refers to the economic, political, and social gains that companies, production, and business units accomplish in the course of their operations, then financial efficiency refers to how a corporation uses its available resources in the revenue development process Specifically, firm financial performance, as defined by Jensen and Meckling (1976), is a measure of how successfully a company uses its resources to create profits, making it a useful tool for a variety of stakeholders Profit maximization is the main goal of every corporate firm, regardless of ownership This obligation is critical since a company's capacity to earn profits in a competitive market affects its long-term survival

The financial performance of a company is frequently used to assess its managerial efficiency and how well its assets are being utilized Accordingly, the financial analysis

is particularly useful for a variety of stakeholders within the company, such as management, shareholders, and employers, as well as users outside the company, such

as creditors, potential investors, financial market analysts, and government officials Financial indicators can be considered the most popular and often used in studies evaluating the enterprise's financial success Indicators to measure financial performance are financial indicators calculated from financial statements, showing the profitability and financial position of the enterprise, including indicators such as net profit, liquidity ratios, profitability ratios, total assets, ; Various previous studies have examined the financial efficiency using one or more of the above performance measurements

The coefficients ROA and ROE, among others mentioned above, are effective indicators of company financial performance which indicate the profitability that businesses have attained in previous accounting periods These two indicators provide a technique for looking back in time or analyzing the company's short-term profitability

Return on assets (ROA):

ROA = Net income

Average total assets

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Return on total assets (ROA) is a measure of a company's profitability per unit of assets ROA is an indicator that provides investors with information about the after-tax profits generated from the amount of invested capital, that is, how much profit after tax

is generated for every dollar invested in total assets ROA for joint-stock companies varies greatly and depends on the industry A company's assets are made up of borrowed capital and equity Both of these sources of capital are used to finance the operations of the company The efficiency of converting invested capital into profit is shown by ROA The higher the ROA, the better because the company is making more money on less investment

Return on Equity (ROE):

Average shareholders′equityROE is an accurate measure to evaluate a dollar of capital spent and accumulate how much profit The higher the ROE ratio, the more effectively the firm uses shareholders' capital, which means that the company has harmoniously balanced between shareholder capital and borrowed capital to exploit its competitive advantages in the process of raising capital and expanding scale

Most of the studies on the impact of ownership structure on firm performance, such

as the study by Zouari & Taktak (2012), Trung & Sang (2013), and Thien et al (2014) suggest that to evaluate the performance, it is advisable to use indicators reflecting profitability such as ROA, ROE Although there may be a different method (such as Tobin’s Q, EPS, ), mainly due to the way profitability is determined in the calculation

of the index, the combination of these two ratios can provide managers, business leaders, shareholders, and the market with comprehensive assessments of past performance as well as its future growth and profit potential

1.1.1.3 Theories of the relationship between ownership structure and firm financial performance

to limit the unusual activities of the agent In some cases, the owner also has to pay additional bonding costs to the agent to ensure that the agent does not take actions that cause damage to the principal or to ensure that the owner will be compensated if such acts indeed arise In addition, the disparity between the agent's actual decisions and those aimed at maximizing the owner's interests also creates what is known as the loss of benefits of an agency relationship

In a joint-stock company, with the relationship between shareholders and managers, usually information asymmetry occurs in the direction that managers will know more information than shareholders, such as information about the ability to achieve company goals, the existing risks Accordingly, managers can make decisions aimed at maximizing personal benefits instead of maximizing corporate value For example, risk-averse managers will pass up profitable opportunities in which a company's shareholders will prefer them to invest, or managers who are paid bonuses based on business

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performance can find ways to achieve good business results with the expectation of receiving benefits from it Research by Fama and Jensen (1983) concluded that in a company there is a separation of ownership and control, in other words, if the actual owners of the company do not participate in the management of the company, "agency

costs" will arise because of asymmetric information between managers and shareholders Property rights theory:

Property Rights Theory was developed in the 60s of the 20th century with the research of some pioneering authors such as Ronald Coase (1960) and Harold Demsetz (1967) The theory proves the existence of firms with internal resource allocation mechanisms that are more economically efficient than the market and explains how the ownership system affects the behaviors of the firm This theory has its roots in the Theory

of Production and Exchange, which was first grounded in analysis of the division of labor by Adam Smith (1776) The theory of property rights expands and develops more than the theory of production and exchange in three points: promoting the role of planners in the organization of production; claiming that there are different ownership models and that the business is not always in the pursuit of profit maximization; indicating the existence of transaction costs

This theory analyzes optimization behaviors on the basis of combining utility functions with the individual nature of decision-makers, thereby analyzing the specific contents of each function Thus, the behavior of decision-makers, whether in business, government or different organizations, can be explained by the same similar mechanism Specifically, in enterprises, instead of assuming that the interests of the owners are the top priority, the utility optimization model emphasizes the adjustments of individuals in the economic environment; thereby explaining the behavior of the business through observing the actions of individual members Most enterprises, whether public-owned

or private, practice a governance structure that separates ownership and management rights This division allowed both owners and managers to exploit their specialization advantages (Fama and Jensen, 1983), but the separation of ownership and management

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created the problem of “representational relations” Solving this “representative relationship” problem depends on the effective monitoring of managers Thus, ownership theory resembles agency theory, emphasizing the importance of ownership

as a factor in determining business performance

Public choice theory:

Economic analysis is used to understand government actions in public choice theory

It is presumptively assumed that governments are made up of individuals Individuals serving as elected officials, appointed officials, or bureaucrats make decisions that affect the government Besides pursuing the public interest, these officials might act to benefit themselves Public choice theory studies the decision-making behavior of politicians based on the assumptions of self-interest, and utility maximization, and hence, states that the purpose of politicians is not necessarily profited maximization, but utility maximization, and political benefit Weaknesses in supervision, management, and promotion of political agendas in state organizations lead to the underperformance of government-owned enterprises (Berger et al., 2005) Thus, public choice theorists argue that state-owned enterprises underperform private enterprises due to significant political influence

1.1.2 Relationship between ownership structure and bank financial performance

1.1.2.1 Bank ownership structure

Commercial banks serve as the key financial intermediaries in the economy Based

on the concept of the ownership structure of enterprises in general, the ownership structure of a commercial bank reflects the size of capital according to the composition

of the bank's owners Commercial banks are divided into five groups based on their ownership structure: state-owned commercial banks, joint-stock commercial banks, joint venture banks, foreign branch banks, and commercial banks that are 100% owned by foreigners Varied types of banks will have different operational and governance features, which will influence the performance of the bank

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In addition, cross-ownership in banking systems is a phenomenon that originates from cross-ownership in the corporate system When one or more banks own shares in each other as well as shares in non-banking firms, this is known as cross-ownership This phenomenon has gained traction in a number of nations throughout the world, particularly in those with commercial banking systems that are larger and play a more vital role than the stock market, such as Germany, Japan, and China

1.1.2.2 Financial performance of commercial banks

The performance of commercial banks can be assessed through criteria such as brand value, reputation of the bank in the financial market, and other qualitative indicators that demonstrate the bank's success These qualitative assessments are concretized through the quality of products and services provided by the bank, the professionalism and breadth of the distribution system, the management and administration capacity of the bank's leadership team, along with HR policies, marketing These factors represent the bank's reputation, service quality, and the extent to which investors and consumers employ the bank's services

However, compared to these criterias with such a lack of clarity, quantitative factors are prioritized to be used when analyzing the effectiveness of commercial banks Commercial banks are also a type of enterprise, so the indicators used to assess corporate financial performance can also be applied to commercial banks There are two types of indicators to evaluate the financial performance of commercial banks based on the characteristics of commercial banks as financial intermediaries for the economy The first is accounting-based metrics that include performance ratios (ROA and ROE are commonly used), and the indicators of profitability, growth, liquidity and risk level are also representative

In commercial banks, ROA provides investors with information about the profits generated from the total assets held by the bank, including equity and external capital, while ROE reflects the ability of the bank to use its capital to profit Some typical indicators such as NIM, NPL, LDR, and CAR are summarized as follows:

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Net interest margin (NIM):

NIM = Net interest income – Net interest expense

Average interest earning assetNIM is one of the characteristic indicator for a bank's profitability and growth It reveals how much the bank is earning in interest on its loans compared to how much it

is paying out in interest on deposits This metric helps prospective investors determine whether or not to invest in a given financial services firm by providing visibility into the profitability of their interest income versus their interest expenses

Nonperforming loans to loans ratio (NPL ratio):

NPL ratio = Nonperforming loans

Total loans

An NPL ratio is used to measure the level of the bank's credit risk and the quality of outstanding loans A high ratio means the bank bears a greater risk of loss if it fails to recover the owed amounts, while a low ratio means that the outstanding loans pose a low risk to the bank

Loan-to-deposit ratio (LDR):

LDR = Outstanding loans

Total depositsThe LDR ratio is used to assess a bank's liquidity by comparing a bank's total loans

to its total deposits for the same period This ratio shows a bank's ability to cover loan losses and withdrawals by its customers Investors event of an economic downturn resulting in loan defaults

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Capital adequacy ratio (CAR):

CAR = Tier 1 Capital + Tier 2 Capital

Risk Weighted AssetsThe capital adequacy ratio is a measurement of a bank's available capital expressed

as a percentage of a bank's risk-weighted credit exposures It is used to protect depositors and promote the stability and efficiency of financial systems around the world

The second method to evaluate bank financial performance is based on market ratios, where Tobin's Q or EPS are the most commonly used Tobin's Q is the market price of a bank over its replacement cost of capital, if this coefficient is high, the bank will invest more since the cost of acquiring new capital is lower than the bank's market cost Earning per share (EPS) is the portion of profit that a bank allocates to each share

of common stock outstanding This indicator is often meaningful in comparing and evaluating the ability of banks to use capital

In this research, ROA and NIM are used to measure the bank’s financial performance

1.1.2.3 Relationship between ownership structure and bank financial performance:

Impact of state ownership on bank financial performance

Although most of the state-owned banks in the world following the trend of integration have been equitized, it is undeniable that state ownership still plays a very important role in the financial system of some countries La Porta et al (2002) pointed out that a government presence is necessary to finance socially desirable projects and to initiate both financial and economic development in countries subject to their institutional underdevelopment Government ownership will stimulate economic growth when financial institutions are not fully developed or the private sector does not meet the requirements of the market The central bank, through intermediaries that are state-owned commercial banks, will have a basis to perform its role more easily Specifically,

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government-owned commercial banks are considered to be the leaders in implementing national monetary policy, thereby contributing to stabilizing the money market and banking system These commercial banks usually have a large scale with a dominant market share, so they can lead the market In addition, state ownership has the advantage

of a rich reputation, gaining the trust of customers, and reducing liquidity risks and lending costs Corporate governance and long-term sustainable profit orientation help prevent excessive risk-taking by management and prevent unfair competitive practices like private commercial banks

On the other hand, state-owned commercial banks in their operations have revealed many of the same shortcomings as state-owned enterprises in general Barth et al (2000) argue that public-owned banks have a negative impact on productivity and efficiency and are also associated with weak capacity and higher levels of corruption Even if these government-owned commercial banks have a reasonable operating management mechanism, the conflict between the business functions and the implementation of policies as directed by the Central Bank has limited the competitiveness and transparency of the banking system When faced with the same risks as privately owned commercial banks, state-owned commercial banks still have a higher risk of loss This leads to a limited ability to withstand uncertain risks as well as the ability to increase capital through retained earnings

Impact of private ownership on bank financial performance:

According to La Porta et al (2002), for developing countries with a large state ownership rate in the banking sector, privatization is an important solution Private banks will replace the presence of the Government with private investors, thereby limiting loans affected by the political decisions of the State Bank Micco et al (2004) stated that state-owned joint-stock commercial banks have lower profitability ratios than private joint-stock commercial banks Cornett et al (2010), after performing research in 16 East Asian nations between 1989 and 2004, came to conclusions that government-owned banks had lower profitability, lower tier-one capital ratios, but more credit risk, worse

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liquidity, and inferior managerial efficiency than private banks Before this, the findings

of Berge et al (2002) in the Argentine context in the 1990s also showed that the performance of government-owned banks improved significantly after experiencing a long period of bad performance before privatization

If only a small part of privatization is carried out, with a modest decrease in State ownership or a low level of participation in banking by foreign investors, it will be difficult to see significant improvement in bank performance In research papers related

to privatization, Boubakri (2005) conducted research on state-owned banks privatization in 22 developing economies and found that, while several profit indicators

post-of these banks declined dramatically initially, they eventually improved after two years Mwathi (2009) investigated the relationship between Kenyan commercial banks' financial performance and ownership structure from 2004 to 2008 She discovered that both private and state-owned banks had a negative relation with ROA as the financial performance indicator Thus, the presence of internal investors in the bank ownership structure can have a good impact, but it can also have a detrimental impact if the monitoring is inadequate, allowing these shareholders to exploit their authority for their own or a group of shareholders' profit

Impact of foreign ownership on bank financial performance:

A considerable number of studies suggest that the presence of foreign investors in the ownership structure has a favorable influence on bank performance, or at the very least does not have a negative impact However, additional examination reveals that this effect varies between banks in developed and developing countries Demirguc-Kunt & Huizinga (1999) found that commercial banks with foreign ownership are less profitable than domestic commercial banks in developed countries, but that the opposite is true in developing countries, where foreign commercial banks are more profitable The reason for this is that, in the undeveloped financial sector, foreign banks have technological, human resource, and international experience advantages over domestic banks; however,

in order to remain competitive and sustainable Furthermore, foreign bank participation helps the credit access procedure Interest rates are frequently cheaper and access to loans is often simpler in nations with a high ratio of foreign banks to foreign investors than in countries with low rates

1.2 Emprical research papers

The relationship between corporate performance and shareholder structure is said to

be first mentioned in America by Berle & Means (1932) They suggested that the dispersion in share ownership has a negative relationship with the performance of the company and the administrator might pursue interests that are different from those of owners Since this famous finding, to date, there have been many empirical studies

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investigating the relationship between ownership structure and financial performance of business units with diverse types of ownership across different geographical areas using different methods, thereby drawing different conclusions

In the first research direction, the scholars have investigated whether ownership concentration or ownership structure affects corporate financial performance Having the same opinion as Berle & Means, some studies suggested that the concentration of ownership through increasing the efficiency of supervisory management and reducing agency costs has had a positive impact on the company's performance (Shleifer&Vishny, 1986; Claessens & Djankov, 1999) In contrast, Demsetz (1983) argued that ownership structure is the result of a profit-maximizing process that leads to equilibrium, and there

is no reason to think that firms with scatter capital are less efficient than concentrated firms On that basis, Demsetz and Lehn (1985) provided evidence for the endogeneity

of the ownership structure when using linear regression for 511 American large firms Besides, they determined that there is no relationship between ownership concentration and firm financial performance which is measured by accounting profit rates Similarly, Morck et al (1988); Holderness & Sheehan (1988), and Demsetz & Villalonga (2001) confirmed this hypothesis when using Tobin's Q as a proxy for the corporate performance to study the same market The irrelevance of ownership structure to firm profitability is also pointed out in companies in other markets such as China (Hovey et al., 2003); HongKong (Chen et al., 2005); Australia (Mc Mahon, 2007), Tehran (Fazlzadeh et al., 2011) and Islam (Zouari & Taktak, 2012) However, Antoniadis et al (2010) and Balagobei & Velnampy (2017) used the efficiency measures along with return on equity (ROE) and found a positive effect of ownership concentration on the financial performance of companies, while Kiruri (2013), Khamis et al (2015) demonstrated a detrimental impact as assessed by ROA About the relationship between ownership structure and bank efficiency, a lot of studies have agreed that the impact is significant (Micco et al., 2004; Perera & Weerasinghe, 2021) while Wen (2010), stated that there is the irrelevance of ownership structure to performance of credit institutions

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The second research direction attracts more attention from researchers, learning about the identity composition of shareholders in the company Jensen and Meckling (1976) laid the groundwork for this direction by developing agency theory In this research, they employed the OLS regression method to investigate the link between manager behavior, agency cost, and ownership structure when considering the ownership ratio of the company's board of directors as an exogenous variable They concluded that there is a linear relationship between managerial ownership and agency costs, whereby the more shares a manager holds, the more he manages the company in the direction of improving the firm performance in order to maximize his benefits Based

on that, various studies have addressed different concentrations of ownership arrangements, including foreign ownership, government ownership, domestic ownership, family ownership, institutional ownership, and managerial ownership, to explain the link between ownership structure and financial performance (Outdat et al., 2021)

The studies of ownership structure in developing markets, particularly those with state ownership, such as Eastern European countries, China, ASEAN, and Vietnam, have their own set of peculiarities After the economy is changed from a centralized economy, which reflects governmental interference in the operations of enterprises in the economy, government ownership in these nations generally has a large share (Hue & Lam, 2017) After researching on over 700 Czech firms from 1992 to 1997, Claessens & Djankov (1999) suggested that the influence of foreign ownership on a company's performance is diametrically opposed to the effect of state ownership on a company's performance This

is explained by agency theory, which stated that when the government owns and manages a company, it faces additional ethical issues, as well as support programs for other public reasons Foreign enterprises, on the other hand, seek stronger cash flow and make clear differences between regulators and owners, therefore having better performance Xu & Wang (1999) investigated whether there is a significant effect of ownership structure on the operating performance of Chinese listed companies on the

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basis of corporate governance They demonstrated the inefficiency of state-owned companies and suggested that the Chinese government should diversify the state ownership and facilitate other ownership components such as institutional or foreign ownership Similarly, Sun &Tong (2003) proved that in China, government ownership has an adverse influence on company performance, while foreign ownership has a disproportionately positive impact on the company's success

In terms of family ownership, Claessens et al (2000) argued that many developing countries are characterized by substantial family ownership of listed companies When collecting data about the ownership structure of Malaysian banks over 2000-2011, Nora and Anis (2015) stated that most domestic banks were family-controlled; with most of them holding shares of more than 65%, but family ownership had trivial effects on Malaysian performance Using both market and accounting-based performance measures, Chen et al (2005) assert the irrelevance of family ownership concentration on firm performance in Hong Kong On the other hand, some pieces of research have documented a positive effect of family control on firm performance by reducing agency costs between shareholders and managers such as Anderson and Reeb (2003), Maury (2006), Haija & Alrabba (2017), Oudat et al (2021)

Banking system plays a crucial role in bringing capital into the economy, encouraging economic growth, and achieving the government's macroeconomic objectives La Porta et al (2002) provided two theories to justify state participation in banks: a development perspective on the one hand, and a political perspective on the other The first contends that government participation is required to finance socially desired initiatives and to restart both financial and economic growth in nations with underdeveloped institutions The second hypothesis proposes that in economies with weak financial systems, government ownership allows for the provision of jobs and benefits in exchange for votes Almost research, especially in developing economies, has revealed a negative link between government ownership and bank performance Phong

&Tuan (2020) The studies of Gupta (2005), Micco et al (2007), Berger et al (2009)

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and Kiruri (2013) agreed that state ownership has a negative impact on bank profitability and productivity, thereby discouraging overall growth in the country (La Porta et al 2002) Besides, research papers are also interested in foreign ownership and private ownership in the banking sector Micco et al (2004) stated that foreign ownership is a factor that promotes the efficiency of banking operations This can be explained because

of the fact that foreign banks have access to cheaper international capital due to their international connections (Wanniarachchige & Uddin, 2011) and all these banks can get loans from the parent bank (Galac & Kraft, 2000) The study also suggested that state-owned joint-stock commercial banks have lower profitability ratios and higher costs than foreign and private banks According to Lensink et al (2008) and Hue & Lam (2017), state ownership and foreign ownership generally have opposite impacts in nations where the government aims to dominate the economy Using bank-level data from 80 countries from 1988 to 1995, Demirguc-Kunt & Huizinga (1999) found that commercial banks with foreign ownership are less profitable than domestic commercial banks in developed countries, but that the opposite is true in developing countries, where foreign commercial banks are more profitable Boubakri (2005) conducted research on government-owned banks post-privatization in 22 developing economies and found that, while several profit indicators of these banks declined dramatically initially, they eventually improved after two years, outperforming state-owned banks but still inferior to foreign and private banks

Applying stochastic frontier estimation procedures, Bonin et al (2004) computed the efficiency of 225 banks in 11 emerging countries from 1996 to 2000 With ROA being the variable representing financial performance, they discovered that foreign-owned banks are more cost-effective and deliver better service than other banks, particularly if they have a strategic foreign owner The government-owned banks are less efficient in providing services, which supports the theory that in emerging nations, the best banks were privatized first Mwathi (2009) investigated the impacts of Kenyan commercial banks' financial performance and ownership structure over 2004-2008 She

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discovered that both private and state-owned banks had a negative relation with ROA as the financial performance indicator The study also found that government-owned commercial banks perform badly compared to foreign or domestic commercial banks and that broadly held banks outperform closely-held institutions Analyzing the financial data of 16 developing East Asia countries from 1989 to 2004, Conett et al (2010) stated that state-owned banks had inferior performance compared with the private banks, and foreign-owned banks are inclined to have sharper profitability than other counterparts Lin et al (2015) used a stochastic frontier approach to examine the bank efficiency of

12 Asian developing countries before and post GFC 2008 and found that increasing foreign presence enhances bank performance while the government control may cause the opposite impact To research about the impact of different types of ownership structures (government-owned, domestic private, and foreign) on how banks perform, Perera & Weerasinghe (2021) collected data from Sri Lankan commercial banks from

2015 to 2020 The findings showed that compared with the other two types of banks, foreign banks have the best performance while state-owned banks are the worst-performing banks in Sri Lanka

On the other hand, some studies, such as Bhattacharyya et al (1997)'s study, suggested that state-owned commercial banks outperform foreign and private commercial banks when examining the effectiveness of 70 Indian banks over the period

1986 through 1991 by using data envelopment and stochastic frontier analysis For 12 transition countries of Central and Eastern Europe between 1993 to 2000, Yildirim & Philippatos (2007) found that foreign banks had more cost-effective control but lower profitability than local private commercial banks and government-owned commercial banks For the banking system in Latin America, Figueira et al (2009) investigated that the performance of state-owned and privately-owned banks differed surprisingly slightly and state-owned banks are more efficient than privatized banks in developing nations Zouari & Taktak (2012) explored the relationship between ownership and performance

of more than 50 banks in 15 Muslim nations between 2005 and 2009 Panel data

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regression model results revealed that family and state ownership positively impact bank performance, using ROA and ROE as dependent variables indicating bank efficiency and bank-level characteristics as control factors According to Ivashkovskaya et al (2012), foreign ownership has a negative impact on banks in emerging nations since foreign investors lack not just motivation but also bargaining strength when compared

to domestic investors They also show that, during the global financial crisis, state ownership is a positive value driver for bank profitability One of the reasons is that state-owned banks have a number of advantages, including government loans and subsidies with lower interest rates than the market, which might help them survive a financial crisis Outdat et al (2021) investigated the relationship between ownership structure concentrations and commercial banks' financial performance in one of the emerging countries Also employing the panel regression for the period 2015-2019, they found the positive impact of government, family, and institutional ownership on the financial performance of Bahrain commercial banks measured by ROE and EPS The findings revealed that excellent corporate governance and a healthy ownership structure are important in improving a company's financial performance through lowering agency costs

In Vietnam, international studies on the relationship between ownership structure and performance of commercial banks have just become increasingly common in recent years Previously, only research papers on certain groupings of nations, such as developing countries or ASEAN, had been conducted, including Vietnam Thangavelu

& Findlay (2010) investigated the factors that influence bank efficiency in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam from 1994 to 2008 by employing a fresh data source of almost 600 institutions Their results and findings highlighted the importance of foreign ownership and local policy context in determining bank performance Besides, they pointed out that monitoring of financial markets tends

to undermine bank efficiency However, Cornett et al (2010), after performing research

in 16 East Asian nations including Vietnam between 1989 and 2004, came to a different

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conclusion According to research, state-owned banks had lower profitability and lower tier-one capital ratios, but more credit risk, worse liquidity, and inferior managerial efficiency than private banks In addition, due to the similarities in the two banking systems, research in China may be utilized as a foundation for analyses in Vietnam For the Chinese banking system over 1994-2003, Berger et al (2009), compared the efficiency of three groups: Big Four Banks, Non-Big Four state-owned banks, foreign banks, and private domestic banks Using standard errors clustered OLS regressions, they stated that foreign banks are the best financial performance whereas Big Four banks are the least efficient Ha et al (2006) was one of the first studies to mention the link between commercial Vietnamese banks' ownership structure and performance Findings suggested that the commercial banks in which the government owns more than 50% of share capital operate worse than the other types of commercial banks in the economy Subsequent studies such as those of Hung (2008), Ngo (2010), and Mau & Thanh (2012) all show that there is a connection between ownership structure and the performance of Vietnamese commercial banks

When reviewing data from 39 commercial banks in Vietnam from 2005 to 2012, Trung & Sang (2013) agreed with Ha et al (2006) that state-owned commercial banks perform less effectively than other commercial banks The study employed ROA and ROE as indicators for bank performance but found that only ROE is affected by the type

of bank An & Huong (2013) used the net interest margin (NIM) variable to examine the factors impacting the financial performance of Vietnamese commercial banks Employing the feasible generalized least squares approach (FGLS) for panel data regression analysis, private joint-stock commercial banks are said to have a stronger impact on NIM than government-owned banks, in addition to recognizing the positive impact of operating costs, credit risk, credit balance, liquidity risk, and equity ratio The findings of Thien et al (2014) 's empirical investigation showed that state ownership has

a negative influence on the performance of state-owned commercial banks According

to the authors, although state-owned commercial banks have certain benefits, such as

In the line with Son, Hung (2017) used qualitative and quantitative research methodologies with an unbalanced panel data sample of 26 commercial banks from 2008

to 2015 to investigate the banking performance as assessed by ROA, ROE, and NPL This is also the period when the Vietnamese financial sector has seen significant changes, including the equitization of state-owned commercial banks, involvement in international integration with the emergence of foreign ownership, and industrial reorganization State ownership has a negative effect, foreign ownership and the CGI index have a positive effect, and the impact of ownership concentration is not obvious, according to pooled regression findings using OLS, FEM, REM, and GMM Huan et al.(2019)’s study was based on data from 20 typical Vietnamese commercial banks collected over a 27-year period from 1991 to 2017 The findings indicated that there is a strong link between ownership structure and performance in the banks analyzed; yet, during the financial crisis, Vietnamese commercial banks' operational efficiency and scale efficiency were poor Joint-stock commercial banks with the same ownership structure were considered to be less efficient in their use of capital and assets, whereas

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banks that modified their ownership structure by listing on the stock exchange functioned more effectively after one year than banks with the same ownership structure The authors argued that this is because working in banks that choose to be equitized is extremely difficult, thus their efficiency is initially low; but, after a period of stability and familiarization, the costs are employed more efficiently The irrelevance of private ownership to bank efficiency was found in Phong & Tuan (2020)’ research Furthermore, they believe that the bank's ROA ratio has a negative association with state ownership and a positive relation with foreign ownership With a sample of 30 Vietnamese commercial banks over 2002-2017, the author utilized the same regression models as Son et al (2014) Dung & Trinh (2020) employed a panel data regression model to examine the influence of ownership structure on commercial bank profitability using ROA and NIM indicators on a dataset of 25 Vietnamese commercial banks from 2007

to 2017 State ownership, non-state ownership, and foreign ownership are all factors in the ownership structure According to research, the greater the state ownership rate, the lower the profit, whereas the larger the non-state ownership rate, the higher the profit Furthermore, the empirical study revealed that foreign ownership had no effect on the profitability of Vietnamese commercial banks

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SUMMARY OF CHAPTER 1

In the first chapter of the thesis, the student reviewed the most general ideas, including the concept of ownership structure, financial performance and theories explaining the relationship between them in the enterprise After that, the study focuses

on analyzing these contents specifically in commercial banks, with emphasis on ownership structure according to shareholder identity including state ownership, private ownership and foreign ownership At the end of chapter 1, previous related research papers are sellected synthesized to serve as an analytical basis for the next chapters of the thesis

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CHAPTER 2 REAL SITUATION OF OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE OF JOINT-STOCK COMMERCIAL BANKS WITH THE STATE OWNERSHIP OF OVER 50% CHARTER CAPITAL IN VIETNAM

FOR THE PERIOD 2009-2021 2.1 Overview of ownership structure and financial performance of Vietnamese commercial banks

2.1.1 Regulations related to ownership structure in the Vietnamese banking system

Up to now, the latest law on credit institutions that has been enacted is the 2017 law The 2017 Law on Credit Institutions was approved by the National Assembly on December 12, 2017 on the basis of the Law on Credit Institutions No 47/2010/QH12 (issued on June 16, 2010) and Law No 17/2017/QH14 of the National Assembly

"amending and supplementing a number of articles of the Law on Credit Institutions", effective from January 15, 2018 Compared with the 2010 Law on Credit Institutions, the 2017 Law stipulates notable new contents

Regarding ownership in general, the 2010 Law on Credit Institutions has relatively specific and strict regulations Accordingly, Article 55 of the Law on Credit Institutions

2010 stipulates that the limit on share ownership of a credit institution for individual shareholders is 5%, and for institutional shareholders is 15% (except for the case of owning shares under SBV to handle credit institutions in difficulty, guaranteed according

to the system of credit institutions; Owning state shares in equitized credit institutions; Owning shares of foreign investors with the maximum ownership ratio prescribed by the Government)

The Law on Credit Institutions 2017 introduces amendments and supplements in order to be transparent about the source of capital contributed by shareholders, to prevent cross-ownership such as adding more cases of ownership of more than 15% of charter capital with institutional shareholders and detailing exceptions for shareholders and related persons of shareholders Specifically, according to Point a, Clause 2, Article 55

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of the Law on Credit Institutions 2017, organizational shareholders may own more than 15% of the charter capital when owning shares in a credit institution that is specially controlled under the restructuring plan approved by a competent authority; owning shares of a credit institution in a subsidiary or affiliated company specified in Clauses 2 and 3, Article 103, Clause 3, Article 110 of this Law Clause 3, Article 55 stipulates:

“Shareholders and their related persons may not own shares exceeding 20% of the charter capital of a credit institution”, except for the case specified at Points a, b and c, Clause 2 of this Article; major shareholder of a credit institution and related persons of such shareholder may not own shares of 5% or more of the charter capital of another credit institution In addition, similar to the Law on Credit Institutions 2010, the prescribed ownership ratios include the capital entrusted to other organizations and individuals to buy shares

Regulations on share ownership of foreign investors:

From the Law amending and supplementing a number of articles of the Law on Credit Institutions No 20/2004/QH2011, the government has allowed "foreign credit institutions to contribute capital and purchase shares of credit institutions operating in Vietnam" Specifically, the ownership of shares by foreign investors in Vietnamese credit institutions is clearly stated in the Law on Credit Institutions 2017 and Decree No 01/2014/ND-CP “on foreign investors' purchase of shares of Vietnamese credit institutions” Clause 1, Article 16 of the Law on Credit Institutions 2017 stipulates:

“Foreign investors may purchase shares of Vietnamese credit institutions” Also according to Clause 2 of this Article, conditions, procedures, maximum total share ownership level of foreign investors, the maximum share ownership rate of a foreign investor in a credit institution Vietnam, conditions for Vietnamese credit institutions to sell shares to foreign investors must comply with the Government's regulations Article

7 of Decree No 01/2014/ND-CP clearly outlines regulations on foreign ownership ratio

in credit institutions in Vietnam

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Table 2.1: Regulation of share ownership rate for foreign investors in

joint-stock commercial banks in Vietnam

capital of the bank

A foreign individual Not exceeding 5% of the charter capital of

a Vietnamese credit institution

A foreign organization Must not exceed 15% of charter capital,

except for strategic investors

A foreign strategic investor Not more than 20%

A foreign investor and a person related to

that foreign investor Not more than 20%

Total share ownership of foreign investors Not more than 30%

Source: Article 7 of Decree No 01/2014/ND-CP

Compared with the previous regulation (Decree No 69/2007/ND-CP), the allowed foreign ownership ratio has been increased This is practically consistent with the trend

of international integration, creating favorable conditions for investors to participate in the Vietnamese financial market instead of having to establish a bank with 100% foreign capital In addition, Articles 9 and 10 of Decree No 01/2014/ND-CP also specify the share ownership conditions for foreign organizations that buy shares with ownership of 10% or more of charter capital and conditions to become a foreign strategic investor of

a Vietnamese credit institution In particular, Clause 6, Article 10 clearly states that foreign investors who want to become strategic shareholders must "not own 10% or more

of charter capital in any other credit institutions in Vietnam" This helps prevent foreign investors from taking advantage of legal loopholes to acquire domestic banks

Regulations on the representative of the owner of State capital at commercial banks:

According to Clause 10, Article 4 of the Law on the State Bank of Vietnam (Law

No 46/2010/QH12), the State Bank "acts as the representative of the owner of the State's capital in enterprises performing the functions and tasks of the State Bank, credit institutions with state capital as prescribed by law”

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The rights and obligations of the State owner's representative in the investment of state capital in Vietnamese banks are specified in Decree No 10/2019/ND-CP "on the exercise of rights and responsibilities of representative of the state owner” (effective from March 15, 2019), replacing Decree 99/2012ND-CP of the Government “on assignment and decentralization of exercise of rights, responsibilities, and obligations of the State owner to State-owned enterprises and State capital invested in enterprises” Decree No 10/2019/ND-CP stipulates the owner's representative agency to exercise the rights and responsibilities of representing the owner of the state capital to invest in joint-stock companies, limited liability companies with two or more members through the representative of the state capital (Clause 1, Article 13) For commercial banks in which the State holds more than 50% of charter capital (such as Vietcombank, Vietinbank, and BIDV), the State Bank will exercise the right and responsibility to represent the owner of state capital in investment through the representative of the State capital Specific regulations on the representative of the state capital are stated in the Circular No 21/2014/TT-BTC of the Ministry of Finance promulgating the “Operation Regulations of the Authorized Representative for the state capital invested in the enterprise” effective from April 1, 2014, and Decision No 678/QD-NHNN “Regulations

on direct owner representatives, state capital representatives at credit institutions, financial institutions and enterprises managed by the State Bank of Vietnam” effective from the date of signing for promulgation April 12, 2017

Thus, SBV is both a state management agency and also acts as the State's owner's representative agency in state-owned commercial banks According to the Law on Credit Institutions 2017, with respect to credit institutions or foreign bank branches, State Bank

of Vietnam, as a state management agency, performs a number of tasks and powers such

as approving changes to the charter capital level, listing on the foreign stock market, (Clause 1, Article 29); approve the tentative list of people elected and appointed as members of the Board of Directors, members of the Members' Council, members of the Supervisory Board, the General Director (Director) of the credit institution (Article 51)