IFC has approved a US$125-million finance package for the Vietnam Prosperity Joint Stock Commercial Bank (VPBank). This is the largest loan IFC – a member of the World Bank Group – is providing to a Vietnamese bank in 2016 to date.
The funds are expected to help VPBank expand lending to micro, small- and medium-sized enterprises (SMEs), especially those owned by women, as well as import and export firms. The package comprises a $100-million five-year syndication loan from the IFC’s own account and from Cathay United Bank. The IFC will also provide VPBank a trade guarantee of up to $25 million under the Global Trade Finance Programme (GTFP).
The long-term loan will be divided into two contracts of $50 million each. The first contract was signed earlier this week in Hanoi and the second one is expected to be signed in the fourth quarter of 2016. In 2012, IFC helped the lender develop a comprehensive plan to strengthen its corporate governance practices.
As SMEs are the focal segment of VPBank’s strategy to become a leading retail bank in Viet Nam, Nguyen Duc Vinh, VPBank chief executive officer, said the finance package would help his bank to accelerate the realisation of this ambitious target and provide practical benefits to local customers. He said the IFC’s investment also reaffirmed VPBank’s operational efficiency and transparency in the financial market.
As the largest global development institution focusing on the private sector in emerging markets, IFC has particularly focused on SMEs that are an important part of the economy, accounting for 97.6 per cent of the total active enterprises in Viet Nam and employing a large part of the population. Yet, access to finance is seen as a key obstacle to their business growth and expansion, as only about 30 per cent of the enterprises have access to formal financial services.
VPBank, which also focuses on retail banking and SME segments, has a countrywide footprint of operations, with 214 branches and transaction offices, 64 SME centres, 433 branded automated teller machines (ATMs) and 16,000 linked ATMs. VPBank is rated by Moody’s with a long term rating of B3 and a stable outlook. It is also among the 10 banks selected by the State Bank of Vietnam (SBV) to pilot the Basel II implementation road map in Vietnam.