The aim of the additional financing is to help local businesses with disrupted cash flows sustain operations and maintain jobs.
IFC, a member of the World Bank Group, is providing $140 million in loans to Vietnam Prosperity Joint Stock Commercial Bank (VPBank) and Orient Commercial Joint Stock Bank (OCB) to help them support clients, especially small and medium enterprises (SMEs), which have been impacted by the Covid-19 pandemic.
As part of its Covid-19 fast-track financing support package, IFC is providing VPBank with $100 million and OCB with $40 million in one-year, renewable senior loans. The funding will provide VPBank and OCB, IFC’s existing clients, with additional liquidity to continue lending to businesses as these banks are offering payment relief to their borrowers at the same time.
IFC is also partnering with international lenders including the Asian Infrastructure Investment Bank (AIIB) to mobilize an additional financing package to further expand VPBank’s lending capacity to local businesses impacted by the pandemic.
AIIB will be co-financing up to $100 million to support VPBank’s trade finance and working capital finance to Vietnamese enterprises, including SMEs, during the Covid-19 crisis.
“Small and medium enterprises are a strategic client segment to VPBank and we have continuously offered various solutions to their needs given the ongoing pandemic. IFC’s working capital line will enable VPBank to assist much more businesses, helping them weather an external acute shock as well as supporting broader financial market stability in Vietnam,” said Nguyen Duc Vinh, CEO of VPBank.
About 20 per cent of the working capital line for VPBank is expected to be earmarked for women-owned SMEs, with blended finance funding provided by the Women Entrepreneurs Opportunity Facility (WEOF). WEOF, a first-of-its-kind global finance facility dedicated to expanding access to capital for women entrepreneurs, was launched in 2014 by IFC, through its Banking on Women program, and Goldman Sachs 10,000 Women.
The pandemic has severely impacted Vietnamese businesses including SMEs, a key driver of Vietnam’s economic growth over the past two decades. Guided by the State Bank of Vietnam, VPBank and OCB have taken various relief measures for their SME clients impacted by Covid-19.
OCB’s CEO Nguyen Dinh Tung said that at this period of time, OCB aims to support small and medium enterprises because they are the backbone of Vietnam’s economy. As they struggle amid the ongoing Covid-19 situation, IFC’s timely and rapid support will play a significant role in helping them cope with this unprecedented global crisis, contributing to an economic recovery process that is resilient and sustainable.
IFC is providing $8 billion in fast-track financing to support private-sector clients during the Covid-19 crisis. The bulk of IFC’s financing is going to client banking institutions, enabling them to continue to offer trade financing, working capital support, and medium-term financing to companies struggling with disruptions in supply chains, especially SMEs.
“Our experience from past shocks, including the global financial crisis 2008, has taught us that micro, small and medium enterprises are especially impacted by the current crisis. Keeping them solvent is therefore key to saving jobs and limiting the economic damage,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia and Lao.
IFC’s support to VPBank and OCB will not only help the banks extend payment relief to clients but will also enable them to offer new loans to SMEs, supporting continued operations and preserving jobs, thereby accelerating Vietnam’s economic recovery.
