Welcome Financial Group, IFC invest $60M in Vietnam's non-performing loan market

The partnership co-investment signing ceremony included with more than 60 guests from various banks, credit institutions, the State Bank of Vietnam (SBV), and the Consulate of the Republic of Korea.

It took place in Ho Chi Minh City on July 18.

More than 60 guests from various banks, credit institutions, the State Bank of Vietnam (SBV), and the Consulate of the Republic of Korea, joined the event in HCMC, on July 18. Photo courtesy of Welcome

Focused on developing Vietnam’s NPL market through the acquisition and resolution of distressed assets, this collaboration under the Distressed Asset Recovery Program (DARP) aims to address the challenges posed by increasing NPL ratios amidst global economic crises and the pandemic.

With WFG bringing nearly two decades of expertise in managing non-performing loans from South Korea, this partnership with IFC is poised to resolve up to US$1.2 billion in NPLs, providing over 400,000 defaulted borrowers with renewed access to formal credit and facilitating economic recovery through efficient credit management.

According to Son Jongjoo, Chairman of Welcome Financial Group, the group has steadily grown since its inception in 2002, expanding into various financial sectors and operating in five countries.

Leveraging nearly 20 years of NPL management experience, they established Welcome Debt Trading in Vietnam in 2021.

Furthermore, they have also strengthened their risk management and ethical standards by introducing enhanced KYC, anti-money laundering, and environmental protection systems.

Transparent management of all processes ensures responsible management and sustainability.

Ariane Di Iorio (R), Director of World Bank Group, and Son Jong Joo (L), Chairman of Welcome Financial Group, at the signing ceremony. Photo courtesy of Welcome

"Ultimately, this partnership will enhance our ability to provide greater financial benefits and contribute significantly to Vietnam's financial stability and economic development," said Son.

Meanwhile, Shin Chung-il, the Consul General of the Republic of Korea, stated that Welcome Financial Group and IFC's timely $60 million joint investment in Vietnam's NPL market comes at a crucial moment.

With Vietnam's NPL ratio doubling from 2.1% in 2022 to 4.6% last year, effective NPL management is essential for financial stability.

He said that this investment will improve risk management, increase credit supply, and enhance the stability of Vietnam's financial industry.

It marks a significant milestone as the first collaboration between an international organization and a Korean financial institution in Vietnam.

"We hope this partnership will lead to more joint projects, further strengthening financial cooperation between Korea and Vietnam," said the Consul General of the Republic of Korea.

Ariane Di Lorio, Director of the World Bank Group and Representative of the IFC's Distressed Asset Recovery Program (DARP), remarked that the signing ceremony marked a significant milestone in their efforts to enhance financial stability and promote economic growth in Vietnam.

Since its establishment in 2007, IFC's Distressed Asset Recovery Program (DARP) has been pivotal in addressing issues of liquidity and asset quality in distressed markets.

This initiative not only provides debt relief but also ensures that banks can continue offering essential credit to households and businesses.

"By developing a robust NPL market and adopting best industry practices, we are fostering a more resilient banking sector and creating a conducive environment for investment and economic growth in Vietnam. This partnership is more than a financial transaction; it is a lifeline to those in need, ensuring that economic activities can resume and thrive," Ariane said.

The representatives from both companies at the signing ceremony. Photo courtesy of Welcome

IFC, a World Bank Group member, committed $43.7 billion in fiscal year 2023 to private companies and financial institutions in developing countries, aiming to end extreme poverty and boost shared prosperity amid global economic challenges. See more information about IFC here.

Welcome Financial Group (WFG), established in 2002, is a South Korean digital financial group offering various services like savings banking, capital management, asset management, startup investments, and leasing.

With operations in countries like Laos, the Philippines, Cambodia, Myanmar, and Vietnam, WFG has become a trusted name in the financial industry. See here for more information about this group.