What credit rating do foreign banks need to join the VIFC?

Decree 329/2025/ND-CP requires a minimum AA- rating from S&P or Fitch, or Aa3 from Moody's, with a stable outlook, for any foreign bank seeking a 100%-owned subsidiary or branch licence at the VIFC.

Which foreign banks want to join the VIFC but cannot?

Named institutions include JPMorgan, Bank of America, Bank of China, and MUFG. Of these, JPMorgan holds an A+ long-term issuer rating from S&P (as of mid-2025 agency publications) — whether that clears the AA- floor depends on the specific rating category applied under Decree 329. MUFG, one of the world's largest banking groups by assets, holds an A/A+ rating — one tier below the requirement in any reading.

Why do Japan's major banks fail the VIFC credit rating test?

Bank credit ratings rarely exceed the national sovereign ceiling. Japan's sovereign rating sits below AA, which means even the largest Japanese banks — including MUFG — are rated A or A+, one tier short of the VIFC minimum.

Has any foreign bank joined the VIFC?

No foreign bank has joined as of June 2026. The VIFC's banking membership comprises seven domestic banks — Vietcombank, HDBank, SHB, MB, TPBank, LPBank, and Nam A Bank — each with AGM approval for a VIFC subsidiary. VietinBank is studying the option.

Is Decree 329's AA- requirement likely to change?

The VIFC's own Vice Chairman, Assoc. Prof. Dr. Nguyen Huu Huan, publicly called on 16 May 2026 for the threshold to be lowered to BB or removed entirely. Whether the SBV or Ministry of Finance has formally initiated an amendment process is not yet confirmed.

Decree 329's AA- Floor Is Keeping Foreign Banks Out of the VIFC

An international financial centre with no international banks is a contradiction the VIFC can no longer ignore. Decree No. 329/2025/ND-CP took effect in late 2025; by June 2026 — roughly six months into the framework — the VIFC's banking membership is entirely domestic. The rule blocking foreign banks is now so conspicuous that the centre's own Vice Chairman is publicly asking the government to tear it up.

PLAIN-ENGLISH SUMMARY

Decree 329 requires foreign banks to hold an AA- or better credit rating to open a VIFC subsidiary or branch. That threshold bars MUFG, Bank of America, and Bank of China — and other named institutions. On 16 May 2026, VIFC-HCMC Vice Chairman Nguyen Huu Huan called for the bar to be dropped to BB or removed entirely. No foreign bank has yet joined. Seven domestic banks have AGM approval for VIFC subsidiaries.

The Rule That Is Doing the Blocking#

Decree 329 sets a single gateway condition for any foreign bank seeking a 100%-owned subsidiary or branch licence at the VIFC: a minimum rating of AA- from S&P or Fitch, or Aa3 from Moody's, with a stable outlook.

On paper, the logic is defensible. The VIFC's architects wanted a banking tier populated by the world's safest, most systemically sound institutions — not a collection of second-tier lenders chasing regulatory arbitrage. A AA- floor is roughly the standard a central bank applies when selecting counterparties for its own reserves.

In practice, the threshold eliminates most of the foreign banks that have actually expressed interest. Of the named institutions — JPMorgan, Bank of America, Bank of China, and MUFG — Bank of America, Bank of China, and MUFG do not clear the bar. JPMorgan's position requires clarification: its S&P long-term issuer rating, as published in mid-2025 agency reports, sits at A+, which is one notch below AA-. Whether any specific JPMorgan entity meets the threshold under the exact rating category Decree 329 applies has not been confirmed by a primary agency source reviewed here.

MUFG's exclusion is the most pointed illustration of the structural problem. By total assets, MUFG is one of the world's largest banking groups. Its exclusion is not a product of financial weakness; it is a product of where Japan's sovereign ceiling sits. As Dr. Can Van Luc, Chief Economist at BIDV and a member of the National Financial and Monetary Policy Advisory Council, has noted, bank credit ratings rarely exceed their home sovereign's ceiling. Japan's sovereign sits below AA. That pulls even the largest Japanese banks — MUFG, SMBC, Mizuho — to A or A+, one notch below the VIFC minimum. The VIFC's threshold does not distinguish between a bank that is rated A because it is risky and a bank that is rated A because its government is rated A. It treats both the same way.

What the VIFC's Banking Tier Actually Looks Like#

Seven domestic banks have received AGM approval to establish VIFC subsidiaries: Vietcombank, HDBank, SHB, MB, TPBank, LPBank, and Nam A Bank. VietinBank is studying the option. These are credible Vietnamese institutions, and their participation is a genuine foundation. But none of them operates a global balance sheet, runs a cross-border FX trading desk at the scale required for genuine currency market depth, or holds the correspondent banking relationships that connect a financial centre to the world's capital pools.

The domestic bank subsidiary wave is a real signal of domestic commitment. It is not a substitute for foreign institutional presence. The VIFC's core function — channelling international capital into Vietnamese markets and Vietnamese issuers into global capital markets — requires institutions that have done exactly that, at scale, elsewhere.

Meanwhile, the VIFC has recorded approximately $19.1 billion in registered and committed investment overall. That figure is cited frequently by the VIFC's leadership as evidence of momentum. What it cannot obscure is that the banking tier — the plumbing through which any of that capital must eventually flow — has no foreign participant.

The Vice Chairman's Proposal#

On 16 May 2026, at the 'Businessman's Coffee' forum in Ho Chi Minh City, Assoc. Prof. Dr. Nguyen Huu Huan — Vice Chairman of the VIFC-HCMC Executive Board — became the first member of VIFC leadership to explicitly ask the government to lower the credit rating floor. His proposal: drop the requirement to BB, or remove it entirely, at least during the VIFC's initial phase.

"In the initial phase, we should be more open to attract international banks," Huan said, as reported by Vietnam.vn. He and Dr. Can Van Luc have each separately reported amendment recommendations to the State Bank of Vietnam and the Government. Sources familiar with the discussions say multiple foreign investors have raised the issue directly with government counterparts as well.

The proposal puts two legitimate policy positions in direct tension. The AA threshold was set precisely because a financial centre's banking tier is where systemic risk originates. A lower bar means more participants, more liquidity, and more corridor connectivity — and it also means more AML exposure, more counterparty risk, and a harder regulatory surveillance task. Any amendment to Decree 329 that lowers the rating floor would need to compensate by tightening the AML/CFT layer that Decree 329's existing framework was designed assuming top-tier counterparties would face.

What a Reformed Threshold Would Unlock#

A threshold at A- or BBB+ — rather than AA- — would open the VIFC to a different order of foreign institutional participation. MUFG becomes eligible. So do DBS, Standard Chartered, and a significant number of European and Asian banks currently rated A or A+. These are the same institutions best positioned to activate the Japan corridor, the Singapore corridor, and the European capital channels the VIFC has been courting through diplomatic MOUs and forum appearances.

UOB — the sole Singaporean bank with a wholly owned Vietnamese subsidiary, which absorbed Citi Vietnam's retail book in July 2025 according to prior reporting by VietNamNet, and is building a new VIFC-zone headquarters with a groundbreaking planned for July 2026 — is reportedly considering VIFC membership. Whether UOB's credit rating meets the current AA- threshold has not been confirmed in the sources reviewed here.

The Reform Window Is Narrow and Visible#

Decree 329 is less than a year old. Amending it this quickly cuts both ways as a signal. It can be read as evidence that the VIFC's governance is agile — willing to correct a rule that is producing the wrong outcome before it calcifies. It can equally be read as regulatory instability: a framework that requires amendment before its first anniversary does not inspire confidence in the durability of the rules that follow.

Whether the SBV or Ministry of Finance has formally initiated an amendment process is not yet confirmed. What is confirmed is that the VIFC's own leadership has now said publicly what foreign banks have been saying privately: the current threshold is not calibrated to attract the institutions that would make the VIFC's international ambitions credible.

What to Watch#

Three developments will indicate whether this is moving toward resolution or stalling:

A formal SBV or MoF response to the VIFC board's amendment request — either initiating a public consultation on Decree 329 revisions or explicitly declining to revisit the threshold.
UOB's July groundbreaking — if UOB proceeds and formally applies for VIFC membership, its rating status will become a test case that either validates the current threshold or sharpens the political case for lowering it.
Whether any of the named interested foreign institutions submits a formal application despite the rating barrier — a rejected application on record would accelerate the amendment timeline by creating a concrete regulatory event, not just a theoretical one.

The VIFC's credibility as an international financial centre ultimately depends on whether the institutions that define international finance can actually join it. Right now, most of them cannot.