31963 - Techcombank SLF

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Summary of Investment Information

Project Number

31963

Company Name

VIETNAM TECHNOLOGICAL AND COMMERCIAL JOINT STOCK BANK

Date SPI Disclosed

Apr 28, 2012

Country

Viet Nam

Region

East Asia and the Pacific

Projected Board Date

May 30, 2012

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 30, 2016

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jun 11, 2012
Signed : Jun 27, 2012
Invested : Jul 23, 2012

Sector

Commercial Banking - Short Term Finance

Project Description

The purpose of the project is to support Technological Joint Stock Commercial Bank (“Techcombank” or the “Bank”) in providing USD liquidity to its trade-oriented SME clients. The proposed investment is an IFC A loan of up to US$30 million with a maturity of up to 12 months, renewable twice (3 year life in total) upon the Bank fulfilling conditions of renewal. The IFC financing will further support the Bank to provide financing to trade-oriented SMEs in Vietnam for their exports, imports and working-capital needs.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

Development Impact

The Facility is expected to have the following specific development impacts:

(i) Increased Access to FCY Financing for SMEs: Limited access to finance is considered a key constraint to private sector growth. Increased access to finance is indispensable to grow the competitiveness of SMEs. By directly financing the short term USD liquidity needs of Techcombank, the Facility will support trade-oriented SMEs for their exports, imports and working capital needs, eventually support the sustainable economic growth of Vietnam.

(ii) Job Preservation in an IDA Country: The Facility is expected to have a positive impact on job preservation by partially bridging the foreign currency liquidity gap in trade-oriented businesses. This is especially important in an environment where a large number of SMEs have been severely affected by the continuing financial crisis. Financial support to SMEs is thus critical to employment preservation in adverse market conditions. Hence, the Facility will have a direct impact on job preservation and employment generation through Techcombank''s financing provided to private companies.

(i) Market Stability: Similar to other local banks, Techcombank has seen increasing need for short-term USD funding as international banks have been cutting down on their exposure to Vietnam. The State Bank of Vietnam ("SBV") has been enforcing administrative measures in an attempt to enhance the availability of USD for export oriented businesses. Therefore, IFC''s intervention will be to contribute to and support the Government''s effort in bringing stability to foreign currency borrowing by enterprises for foreign trade-related purposes.
(ii) Mobilization Effect: In addition to the strong signaling effect of this Facility, IFC potentially can play a mobilizing role by bringing other financial institutions to participate in the financing.

E&S Category Rationale / Risks and Mitigation

This transaction involves a senior loan with a maturity of 12 months, renewable maximum twice, aimed to support the bank’s short term/trade financing lending to trade-oriented SME clients. The project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Review Procedure. The bank''s current short term and trade financing portfolio accounts for circa 80% of the total SME lending. For this project the client will be required, at a minimum, to screen and monitor its lending SME''s activities against the IFC Exclusion List and the applicable E&S laws.

The main E&S risks and impacts of the project derive from the E&S risks of the Bank’s lending activities, the capacity and systems in place to manage these risks, and the Bank’s practices with regard to labor and working conditions. Under the requirements of the existing IFC investment, the company has appointed an E&S officer and developed an environmental and social management system (ESMS). The ESMS, among other things, requires the company to screen all investments for E&S issues and to undertake a more thorough E&S due diligence for projects with potential medium to high E&S risks and impacts.
The company’s labor management was found to be consistent with the requirements of IFC Performance Standard 2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

c/o Mrs. Do Diem Hong
Executive Vice President
Head, Financial Institution Division
Technological and Commercial Joint Stock bank
70-72 Ba Trieu Street, Hoan Kiem Dist., Hanoi, Vietnam
Tel: 84 43 9446368
Fax: 84 43 9446386
http://www.techcombank.com.vn

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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