Financing package from multiple sources to help Vietnam’s VPBank expands lending to SMEs and boost financing, especially for climate-friendly projects.
The International Finance Corporation (IFC), a member of the World Bank Group, will provide a financing package of US$212.5 million to the Vietnam Prosperity Joint Stock Commercial Bank (VPBank) to help it expand its lending to small and medium-sized enterprises (SMEs) and boost financing, especially for climate-friendly projects. Doanh Doanh reports on VET.
The five-year tenor loan comprises $50 million from the IFC’s own account, US$37.5 million from multi-investor the Managed Co-Lending Portfolio Program (MCPP) managed by the IFC, and US$125 million in syndicated loans from the Chinese Bank of Communications Company Limited, the Industrial and Commercial Bank of China Limited, KEB Hana Bank, Kiatnakin Bank Public Company Limited, DEG – Deutsche Investitions und EntwicklungesellschaftmbH, and the multilateral International Investment Bank.
“Our loan to VPBank addresses the IFC’s strategic objective of increasing financing for climate-smart initiatives to boost environmentally-sustainable development in emerging markets with high potential for greenhouse gas emissions reductions, such as Vietnam,” said Ms. Rosy Khanna, IFC Financial Institutions Group Director for Asia Pacific. “The participation by regional and international lenders in this financing package shows the high interest of institutional and private investors in climate finance in Vietnam, facilitating a new source of capital while helping the country tackle climate change at the same time.”
According to VET, this is the IFC’s first green loan to a bank in Vietnam, where most of the near-term multimillion-dollar climate investment potential is in renewables and infrastructure. The loan will qualify under the Green Loan Principles – a widely-accepted set of voluntary guidelines that specify the use of proceeds, monitoring, and reporting. VPBank will also establish a management system to track, manage, and report on the use of proceeds of a loan for dedicated green projects through third party verification.
“Strengthening the green lending market is crucial to helping Vietnam shift to a low-carbon growth model and to mitigate the adverse impacts of climate change,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia, and Laos. “The IFC’s support will help VPBank become the first financial institution in Vietnam to adopt an international comprehensive standard in green lending, sending a positive signal to the market as well as to international investors.”
The IFC has been actively facilitating the development of a climate finance market in Vietnam by supporting regulators to develop sustainable finance policies and tools to promote responsible lending practices in the banking sector, implementing a green building program, and financing renewables projects.
Concerning greenhouse gas emissions, Vietnam’s is one of the most carbon-intensive countries in the world, ranking only after China and Mongolia in the East Asia and Pacific region. While reducing greenhouse gas emissions has been a national target to mitigate the impact of climate change, it presents a $753 billion climate investment opportunity for Vietnam between 2016 and 2030, according to an IFC study.