Vietnam is set to restrict or possibly stop granting new licenses to foreign banks seeking to gain a foothold in the country in hopes that the move would boost M&A activity in the local banking sector, Reuters reported Aug. 9, citing Deputy Prime Minister Vuong Dinh Hue in a statement.

The government, however, will still allow foreign players to purchase shares in or own ailing local banks, according to the statement posted on the government website. It will also sell or forcibly transfer the weak lenders it has acquired.

In 2015, the State Bank of Vietnam forcibly acquired three loss-making private banks — Dai Tin Joint Stock Bank, Ocean Commercial Joint Stock Bank and Global Petro Commercial Joint Stock Bank — at zero cost as part of efforts to revamp the banking system, which had been marred by high levels of nonperforming loans.

About 10 wholly-foreign-owned banks have so far been granted licenses in the country, including HSBC Bank (Vietnam) Ltd. and Standard Chartered Bank (Vietnam) Ltd., the central bank said.