39020 - VPBank Quasi-equity

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Summary of Investment Information

Project Number

39020

Company Name

VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK

Date SPI Disclosed

Feb 7, 2017

Country

Viet Nam

Region

East Asia and the Pacific

Projected Board Date

Mar 9, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Sep 28, 2022

Department

CFGS4 - Global Industry, Financial Markets/FIG Operations - CEA

Industry

Financial Markets

Previous Events

Approved : May 31, 2017
Signed : May 31, 2017
Invested : Aug 25, 2017

Sector

Commercial Banking - General

Project Description

The proposed project consists of a financing facility of up to US$57 million to Vietnam Prosperity Commercial Join Stock Bank (“VPBank” or the “Bank”) in order to support VPBank in raising long-term funds for its lending program to micro and small, medium enterprises (the “Project”).

Associated Advisory Engagement

N/A.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	57.0
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
Quasi-Equity	Loans to SME Borrowers

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

Development Impact

The Project will facilitate increase access to finance in Vietnam, which remains one the most common constraints to business expansion, according to the 2015 World Bank Enterprise Survey. In particular, the Project is expected to support SMEs in the country getting adequate financing. This will allow them to better cope with the investment and capital requirement needs imposed by accelerated economic growth.

IFC's additionality is expected to encompass the following: (i) provide additional long-term funding to VPBank, for its micro, small and medium enterprises lending program, thus helping to increase the access for MSME and SME borrowers; (ii) help VPBank to diversify its funding structure; and (iii) assist VPBank in building its institutional capacities closed to international standards.

E&S Category Rationale / Risks and Mitigation

The proposed project is with an existing IFC Client, VP Bank, to provide a financing facility of an up to US$57 million in order to support the client in raising long-term funds for its lending program to micro, small and medium enterprises. The bank is mainly involved in retail, SME and corporate finance with defined strategy on SME portfolio growth which is under implementation currently. The existing portfolio includes limited exposure to companies involved in business activities with potentially significant adverse environmental and/or social impacts. This exposure is expected to be further reduced over next couple of years. The project has therefore been categorized as FI-2 in accordance with IFC's Sustainability Policy. The bank will be required to comply with the IFC Exclusion List, national E&S laws and the IFC's Performance Standards.

The key risks is related to the ability of the bank to identify and manage environmental and social risks associated with its lending activities, in particular lending to companies operating in sectors such as agriculture, energy production and distribution and real estate. Additional E&S risks and impacts of the bank derive from the capacity and systems in place to manage these risks as well as reputational risks posed by legacy E&S issues associated with some of its existing agriculture and real estate portfolio clients. The bank has assigned responsibility for the ESMS implementation and established an environmental and social unit. VP Bank has developed and implemented an Environmental and Social Management System (ESMS) outlining the procedures, responsibilities and tools for undertaking E&S risk management with focus on MSME lending activities. . For this new investment the client will need to enhance its E&S capacity and upgrade its ESMS to cover extended requirements including application of the Performance Standards to higher risk transactions, and establishing an external communication mechanism. The revised ESMS will apply to the entire non-retail portfolio of VP bank.. The bank's HR Policy and procedures are compliant with PS2 requirements on Labor and Working conditions.

Task Title & Description	Actual Due Date	Status	Comments	Completion Date
Other1 Upgrade ESMS	05/30/2017	Completed	Upgraded ESMS (signed) in English and Vietnamese (filed in IFCDocs)	08/01/2017
Other2 Provide ESMS Implementation Plan (includings staff training plan)	05/30/2017	Completed	Signed by CEO (filed in IFCDocs)	08/01/2017
Other3 Develop external communication mechanism	05/30/2017	Completed	Signed and filed in idesk	05/30/2017
Other4 Implement staff training plan	08/28/2017	Completed	As reported in 2017 AEPR	08/28/2017

Contacts

For Inquiries About the Project, Contact

Vietnam Prosperity Joint Stock Commercial Bank
Mr. Nguyen Duc Vinh
Chief Executive Officer
+84 4 73056600
ducvinh@vpbank.com.vn
89 Lang Ha, Dong Da, Hanoi, Vietnam
www.vpbank.com.vn

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