38038 - VPBank Senior Loan

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Summary of Investment Information

Project Number

38038

Company Name

VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK

Date SPI Disclosed

Apr 13, 2016

Country

Viet Nam

Region

East Asia and the Pacific

Projected Board Date

May 16, 2016

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Sep 23, 2022

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Jun 13, 2016
Signed : Aug 18, 2016
Invested : Oct 5, 2016

Sector

Commercial Banking - General

Additional Project Attributes

Blended Finance

Project Description

The Project is to provide (i) a senior loan that consists of up to US$50 million A loan as well as up to US$50 million B/ Parallel loan, and (ii) a trade finance guarantee facility of up to US$50 million through IFC Global Trade Finance Program (“GTFP”) to Vietnam Prosperity Joint Stock Commercial Bank (“VP Bank” or the “Bank”). Through the investment, IFC will support the Bank’s growth strategy to expand its reach to small and medium enterprise (“SME”) and micro SME (“MSME”) borrowers, particular women-owned SMEs (“WSMEs”), who play an important role within the economy and contribute towards job creation in Vietnam, as well as mortgage segment. The Project will be supported by IFC’s Women Entrepreneurs Opportunity Facility (“WEOF”).

Associated Advisory Engagement

IFC’s investment is expected to be supplemented by an advisory services (“AS”) program to VP Bank, to help strengthen the Bank’s MSME and SME operations.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

The Project is expected to have considerable development impact by increasing access to finance for MSMEs and SMEs, particularly women entrepreneurs in Vietnam. That, in turn, will help increase opportunities for women entrepreneurs and improve livelihoods for a wide cross-section of society. It is also expected to improve access to credit in Vietnam as it will enable VP Bank to provide credit to underserved MSMEs and SMEs.

IFC''s additionality is expected to encompass the following (i) provide additional long-term funding to VP Bank, for its MSME and SME lending program, thus helping to increase access to finance for MSME and SME borrowers; (ii) provide advisory services to assist VP Bank to develop a value proposition for gender finance business line; (iii) drive the Bank to expand financing to women-owned SMEs, thus wielding a strong demonstration effect on other sector players and (iv) IFC''s stamp of approval will send a positive signal and potentially mobilize funding from B/ parallel lenders.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

This project involves a senior loan to support the Bank’s micro and SME lending, in particular women-operated SMEs. The Bank’s SME portfolio mainly includes such sectors as wholesale and retail, warehousing and transport, manufacturing and construction. Given types, sectors, size and tenor of lending activities the overall portfolio risk is considered to be medium. The project has therefore been categorized as FI-2 in accordance with IFC’s Environmental and Social Sustainability Policy. For this project the client will be required to screen loans against the IFC Exclusion List and the relevant Vietnamese Environmental and Social (E&S) laws and regulations.

VP Bank has developed an Environmental and Social Management System (ESMS) which is partially aligned with IFC Performance Standard 1 requirements. The main E&S risks associated with this project relate to the BankÔÇÖs capacity to manage environmental and social issues in its business activities in line with the applicable requirements. The Bank will be required to upgrade the current ESMS allowing on a proper screening against IFCÔÇÖs Exclusion List and application of the relevant Vietnamese E&S laws and regulations to the asset class to be supported by IFC. The Bank will also designate a staff member(s) responsible for E&S risk management and provide necessary training to relevant staff for implementation of the ESMS. The Bank has developed and implemented HR policies and procedures that are generally aligned with the objectives of Performance Standard 2 on Labor and Working Conditions. The Bank will be required to upgrade its existing grievance mechanism for employees.

Contacts

For Inquiries About the Project, Contact

Mr. Nguyen Duc Vinh, Chief Executive Officer
Vietnam Prosperity Joint Stock Commercial Bank
5th Floor, 72 Tran Hung Dao Street, Hoan Kiem District
Hanoi, Vietnam
Tel: (844)-73056600
Fax: (844)- 3928 8904
Email: mailto:ducvinh@vpbank.com.vn
Website: http://www.vpbank.com.vn

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Task Title & Description	Anticipated Completion Date
Nominate officers	05/31/2016
Staff Training	09/28/2016
Upgrade ESMS	06/30/2016
Upgrade existing employee grievance mechanism	09/30/2016

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