World Bank's financing arm bankrolls Vietnamese bank to support SMEs

By Thanh Thu   August 18, 2016 | 09:19 pm PT
The $125 million loan is the largest a foreign organization has granted a local commercial bank this year.

The financing arm of the World Bank has recently approved a loan package worth $125 million for Vietnamese commercial bank of VPBank to help micro and small and medium enterprises, export firms and businesses run by women.

The finance package for VPBank is the largest loan the International Finance Corporation (IFC) has granted a Vietnamese bank this year. The package includes a five-year syndicate loan of $100 million from the IFC and a trade guarantee of up to $25 million.

The long-term loan will be divided into two contracts worth $50 million each. The first loan contract was signed in August between IFC and Cathay United Bank, the co-providers. The second will be signed in the fourth quarter of 2016.


VPBank has received a huge finance package from the World Bank Group. Photo from VnExpress

The trade guarantee contract of $25 million under the Global Trade Finance Program is expected to be signed this month.

This funds will be used to support VPBank's plans to expand its lending to micro firms and SMEs, especially those owned by women, as well as import and export companies in the Southeast Asian nation.

CEO of VPBank Nguyen Duc Vinh said micro and small and medium sized enterprises are an important part of the bank’s strategy to become a leading retail bank in Vietnam, and the finance package could help achieve this goal.

“The $125 million finance package provided by IFC is testament to VPBank’s operational efficiency and transparency in Vietnam’s financial market,” Vinh underlined.

Kyle Kelhofer, IFC’s country manager for Vietnam, Cambodia and Laos, said this investment shows the IFC’s commitment to strengthening the development of Vietnam's financial market and joint stock commercial banks.

As member of the World Bank Group, the IFC is the world's largest development institution focusing on the private sector in emerging economies. The IFC has strict credit due diligence and approval principles based on comprehensive consideration for corporate governance, business strategy, financial soundness and social and environmental protection commitments.

The IFC focuses on supporting SMEs and micro firms that are struggling to access financial sources so they can expand their businesses. Only 30 percent of these enterprises have access to formal financial services.

As of June 30, 2016, VPBank had 214 transaction offices, 64 SME centers, 433 branded ATMs and 16,000 connected ATMs nationwide. Credit ratings agency Moody’s recently rated the bank as B3 with a “stable” outlook. 

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