International Finance Corporation (IFC), a member of the World Bank Group, is proposing to provide a one-year, renewable senior loan of up to $40 million to Vietnam-based Orient Commercial Joint Stock Bank (OCB), according to a disclosure.
The proposed financing package aims to support OCB’s working capital and trade-related lending program to small and medium-sized enterprises (SMEs) in Vietnam, which have been adversely affected by the pandemic.
The financing will provide wholesale liquidity to the mid-sized commercial lender to facilitate on-lending of the proceeds towards SMEs, IFC said in its disclosure.
“The development impact of the proposed project is delivered through improved access to finance/liquidity to relevant stakeholders which will support their capacity to sustain operations and to expedite post-crisis recover; and promotion of the resilience of trade finance markets and broader stability in Vietnam,” the development finance institution said.
Headquartered in Ho Chi Minh City, OCB has 129 branches and sub-branches across Vietnam. The bank’s main shareholders include its chairman Trinh Van Tuan and related parties, who collectively hold a 19.37 per cent stake, and Ben Thanh Group (5.51 per cent).
Japan’s Aozora Bank in January this year announced its intention to acquire 15 per cent of OCB’s common shares. The deal, subject to regulatory approval, marks the Japanese lender’s first foreign foray in a decade.
OCB, which was privatised in 2010, had planned to list its shares on the Ho Chi Minh Stock Exchange in 2018. Its chairman Tuan had then expressed confidence the bank could achieve a market capitalization of $1 billion.
However, the plan didn’t see the light of the day. Tuan later said that OCB had decided to delay its listing until the right time in order to generate the maximum value for the bank and its shareholders.
IFC and OCB started their partnership in 2011 with a trade finance guarantee of $20 million under the former’s Global Trade Finance Programme. The private lending arm of the World Bank Group also extended a $25 million loan to OCB in 2012, followed by a revolving short-term loan of $10 million.
Last March, IFC approved a $100 million loan for OCB to boost its lending to SMEs, especially women-led businesses.
In Vietnam, IFC has also been considering a proposal to extend a one-year, renewable senior loan of up to $150 million to Vietnam Prosperity Joint Stock Commercial Bank (VPBank).
The project is expected to be supported by the Women Entrepreneurs Opportunity Facility, an initiative launched by IFC in partnership with the Goldman Sachs Foundation to help expand access to capital for women entrepreneurs in developing countries.
As of March 2019, IFC had provided more than $400 million in financial assistance to women entrepreneurs in Vietnam.