Vietnam Prosperity Bank bags $212.5m financial package from IFC

It will be used to expand VPBank’s lending to SMEs especially and boost green financing.

World Bank Group member IFC is providing a financing package of $212.5m to Vietnam Prosperity Joint Stock Commercial Bank (VPBank) to boost its SME lending and green financing, an announcement revealed.

The funding will be used to help VPBank expand its lending to small and medium enterprises (SMEs) and boost financing especially for climate-friendly projects. About one third of the financing package will be earmarked for eco-friendly projects, added IFC.

The five-year tenor loan comprises $50m from IFC’s own account, $37.5m from the multi-investor Managed Co-Lending Portfolio Program (MCPP) managed by IFC, and $125m in syndicated loans from the Chinese Bank of Communications Company; Industrial and Commercial Bank of China; Korean KEB Hana Bank; Thai Kiatnakin Bank Public Company; German DEG — Deutsche Investitions- und Entwicklungsgesellschaft mbH; and multilateral International Investment Bank.

Vietnam counts amongst the most carbon intensive countries in the world, ranking only after China and Mongolia in the East Asia and Pacific region. Reducing greenhouse gas emissions presents a $753b climate investment opportunity for Vietnam between 2016 and 2030, according to an IFC study.

Currently, the share of climate financing as a percentage of total bank financing in Vietnam is just about 5% or $10.3b, indicating a significant climate finance gap, noted IFC.

This is IFC’s first green loan to a bank in Vietnam. VPBank will also reportedly 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.