40081 - ABBank Sr Loan

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Summary of Investment Information

Project Number

40081

Company Name

AN BINH COMMERCIAL JOINT STOCK BANK

Date SPI Disclosed

Aug 17, 2017

Country

Viet Nam

Region

East Asia and the Pacific

Projected Board Date

Sep 22, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Dec 18, 2022

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Oct 6, 2017
Signed : Oct 27, 2017
Invested : Dec 18, 2017

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

International Finance Corporation (“IFC”) is considering an investment in the form of senior loans of up to US$150 million, consisting of (i) an A Loan of up to US$40 million; and (ii) a B Loan and/or Parallel Loan of up to US$60 million with a greenshoe option of up to US$50 million to An Binh Commercial Joint Stock Bank (“ABBank” or the “Bank”). Through the investment, IFC will support the Bank's growth strategy to expand its financial products and services to small and medium enterprise (“SME”) and micro SME borrowers, including women-owned SMEs, which will in turn increase financial inclusion, create jobs and reduce poverty in Vietnam. The Project will be potentially supported by IFC's Women Entrepreneur Opportunity Facility (“WEOF”).

Associated Advisory Engagement

IFC is in discussions with ABBank to provide advisory services (“AS”) for banking on women. This AS program will help the Bank strengthen its capacity in serving underbanked and unbanked segments, particularly women entrepreneurs.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
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 Woman-Owned SMEs

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

Development Impact

Project Impact: Stakeholders - Through this investment, IFC anticipates the project will increase ABBank's ability to provide access to financial products and services to MSMEs and SMEs including women-owned SMEs. The project may also support improvements in affordability of loans in Vietnam. Potential advisory component may improve skills related to SME banking and banking on women. Market Impact: Inclusiveness - The current MSMSE Finance Gap in Vietnam is 11 percent of GDP. IFC anticipates that the project will increase access to financial products and services for under-served groups including women entrepreneurs, which in turn is expected to improve financial inclusion, employment and reduce poverty in Vietnam. Competitiveness - Driven by demonstration effect, as this would be the second banking-on-women project in the country, it could bring other banks to this space and improve the product offering for women SMEs and SMEs in general; thus, closing the financing gap.

(i) Long term funding: IFC will provide 5 years funding, which is limited in the local market. With the long term funding, the Project is expected to help ABBank strengthen its existing SME business and position its women-owned SME sub-segment to grow its portfolio in the next five years. (ii) Resource mobilization: This Project will help ABBank access additional long term funding from other lenders. (iii) Long-term partnerships: IFC's investment with mobilization from other lenders would send a strong signal of support to an existing equity client, which is considered as a competitive advantage of ABBank in the market, even if mobilized funding would be at a shorter tenor than IFC's own account investment.

E&S Category Rationale / Risks and Mitigation

The proposed Project is a senior loan with defined use of proceeds to support ABBank's continual growth in lending to SMEs and micro SMEs, including women SMEs and has been categorized as FI-2 in accordance with IFC Sustainability Policy. ABBank is a commercial bank providing financing services to individual, SME and corporate customers. The key commercial sectors supported under ABBank's SME lending include trade, manufacturing, transportation and agribusiness. The E&S risk associated with the SME lending is considered as limited and can be readily addressed through mitigation measures. The Project will be required to comply with IFC Exclusion List and host country E&S laws and regulations.

The Project's key E&S risk derives from ABBank's SME lending, and the capacity and quality of its E&S risk management system (ESMS) in place to manage such risk. Being an existing client of IFC, ABBank has developed an ESMS to ensure their lending activities to comply with the Exclusion List and host county E&S laws. However, it will require further enhancements to improve scope and effectiveness of its implementation. ABBank is found broadly in line with IFC Performance Standard 2 Labor and Working Conditions for its own labor practices.

Contacts

For Inquiries About the Project, Contact

An Binh Commercial Joint Stock Bank
Nguyen Manh Quan
Deputy CEO
84.8.38244855
quannguyen@abbank.vn
170 Hai Ba Trung, Da Kao, District 1, Ho Chi Minh City, Vietnam
www.abbank.vn

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Task Title & Description	Anticipated Completion Date
Enhancement of ESMS implementation	03/30/2018
Improvement of E&S capacity	06/30/2018

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