International Finance Corporation (IFC) is extending a $212.5-million financing package for Vietnam-based VPBank to expand the latter’s lending to small and medium enterprises (SMEs) as well as financing for climate-related projects.
The announcement came more than two months after IFC said it was considering a $150 million support to VPBank.
The five-year loan comprises $50 million from IFC’s own account, $37.5 million from the multi-investor Managed Co-Lending Portfolio Program (MCPP) managed by IFC, and $125 million in syndicated loans from the Chinese Bank of Communications Company Limited, Industrial and Commercial Bank of China Limited, Korean KEB Hana Bank, Thai Kiatnakin Bank Public Company Limited, German DEG and multilateral International Investment Bank.
The World Bank Group’s financial arm said about one-third of the investment will be earmarked for climate-friendly projects, offering a favorable interest rate.
As a result of greenhouse-gas emissions, Vietnam is one of the most carbon-intensive countries in the world, ranking only after China and Mongolia in the East Asia and Pacific region, the IFC said, adding that it created a $753-billion climate investment opportunity for the country until 2030.
Despite the great potential, there is still a huge climate financing gap with only $10.3 billion disbursed for climate projects.
IFC’s financing for VPBank is its first green loan to a bank in Vietnam, where most of the near-term multimillion-dollar climate investment potential is in renewables and infrastructure.
“Our loan to VPBank addresses IFC’s strategic objective of increasing financing for climate-smart initiatives to boost environmentally sustainable development in emerging markets with high potential of greenhouse gas emissions reduction such as Vietnam,” said Rosy Khanna, IFC Financial Institutions Group director for the Asia Pacific.
“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,” added Kyle Kelhofer, country manager for Vietnam, Cambodia and Lao at IFC.
Earlier in 2017, IFC had provided VPBank with a $57 million convertible loan, following a spate of other multimillion-dollar loans.
Founded in 1993, VPBank was listed in 2017 and has a current market capitalisation of $2.17 billion.