IFC has approved a USD 125 million finance package for Vietnam Prosperity Joint Stock Commercial Bank (VPBank). This is the largest loan that IFC – a member of the World Bank Group – has provided to a Vietnamese bank in 2016.
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 USD 100 million five-year syndication loan from IFC's own account and from Cathay United Bank. IFC will also provide VPBank a trade guarantee of up to USD 25 million under the Global Trade Finance Program.
The long-term loan will be divided into two contracts of USD 50 million each. The first contract was signed earlier this week in Hanoi and the second is expected to be signed in the fourth quarter of 2016. In 2012, IFC helped VPBank to 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 Vietnam, Nguyen Duc Vinh, VPBank’s chief executive officer, said the finance package would help his bank to accelerate the realization of this ambitious target and provide practical benefits to local customers. He said that 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 as they are an important part of the economy, accounting for 97.6 per cent of the total active enterprises in Vietnam and employing a large part of the population. However, access to finance is seen as a key obstacle to SMEs’ 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, has countrywide operations, with 214 branches and transaction offices, 64 SME centers, 433 branded 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 to pilot the Basel II implementation road map in Vietnam.