46462 - SeABank Convert

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Summary of Investment Information

Project Number

46462

Company Name

SOUTHEAST ASIA COMMERCIAL JOINT STOCK BANK

Date SPI Disclosed

Jul 1, 2022

Country

Viet Nam

Region

East Asia and the Pacific

Projected Board Date

May 31, 2022

Environmental Category

FI-1 - Significant

Status

Active

Last Updated Date

Feb 15, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : May 31, 2022
Signed : Jun 30, 2022
Invested : Oct 14, 2022

Sector

Commercial Banking - General

Project Description

The investment consists of a five-year convertible senior loan of up to US$75 million on IFC’s own account to Southeast Asia Commercial Joint Stock Bank (SeABank or the Bank), a top 12 private bank by asset size in Vietnam and IFC’s recently onboarded client, to support the Bank’s growth strategy and increase targeted lending to SMEs, including WSMEs. Of the total financing package, at least US$20 million will be earmarked exclusively for on-lending to WSMEs. IFC will have an option to convert its loan to shares in the form of common shares of SeABank.

Associated Advisory Engagement

IFC’s Environmental, Social and Governance Advisory Service is expected to support SeABank with (i) upgrading its environmental and social (E&S) policies and E&S management system (ESMS) to enable the implementation of the Performance Standards (PSs) for project finance and long-term corporate finance activities of higher E&S risk nature; and (ii) enhancing its capacity to implement the upgraded ESMS.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	75.0
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

E&S Category Rationale / Risks and Mitigation

The Project entails a senior convertible loan with loan proceeds dedicated to support SeABank’s SMEs lending in Vietnam. Considering that the loan may be converted to equity in the Bank resulting in exposure to corporate lending activities of the Bank, the Project is classified as FI-1 in accordance with IFC’s Environmental and Social Sustainability Policy. SeABank is a commercial bank and provides a range of financing services to retail, MSMEs and corporates and project finance. The primary sectors of exposure include wholesale and retail, services, construction and real estate, manufacturing, recreation, logistic, hospitality, entertainment, electricity, oil and gas, and infrastructure. For as long as the loan is not converted, the Project will not support any coal-related activities or any higher E&S risk business activities that involve (a) involuntary resettlement, (b) risk of adverse impacts on indigenous peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks; and the applicable E&S performance requirements will be the IFC Exclusion List and applicable E&S laws and regulations in Vietnam. Should the loan be converted to equity, the applicable E&S performance requirements will in addition include application of the IFC Performance Standards for project finance and long-term corporate lending activities of higher E&S risks; and the Project will be also required to meet IFC’s Green Equity Approach (the bank currently does not have any coal exposure) and sub-project disclosure requirements. For as long as the loan is not converted, the Project’s E&S risks will be overall moderate and be associated with the SMEs financed by SeABank, and typically related to labor and working conditions, occupational and community health and safety, pollution control and waste management, among others. Should the loan be converted, the E&S risks will encompass that of all activities financed by SeABank including its project and long-term corporate financing activities, which may be associated with more significant E&S risks and impacts in areas such as occupational health and safety, environment, community health and safety, biodiversity, cultural heritage and involuntary resettlement, among others.

SeABank is an existing client of IFC and has developed an environmental and management system (ESMS). The ESMS comprises procedures for E&S screening, risk categorization, legal compliance verification, implementation of corrective actions and portfolio monitoring, and is appropriate to managing E&S risks of SME lending activities. It has a designated ESMS team to implement the ESMS. Under this Project, SeABank will be required to upgrade the existing ESMS in order to be able to apply the Performance Standards for its higher risk financing activities and to strengthen its external communication mechanism according to IFC’s requirements. The labor practices of SeABank are found overall consistent with the requirements of IFC’s Performance Standard 2 on Labor and Working Conditions.

Task Title & Description	Anticipated Completion Date
Upgrade ESMS and E&S capacity	03/17/2023
Enhance external communication mechanism	03/17/2023
Provide ESMS implementation report	06/15/2023
Conduct an ESMS implementation review	06/09/2024

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.

In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for IFC. The CAO is mandated to address complaints from people affected by IFC-supported business activities in a manner that is fair, objective , and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of IFC.

Independent of IFC management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of IFC’s environmental and social performance through its compliance arm.

Complaints may relate to any aspect of IFC-supported business activities that is within the mandate of the CAO. They 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-financed business activity. Complaints can be submitted to the CAO in writing to the address below:

Compliance Advisor/Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Room F11K-232
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
E-mail: cao@worldbankgroup.org

The CAO receives and addresses complaints in accordance with the criteria set out in its Operational Guidelines which are available at: www.cao-ombudsman.org

Contacts

For Inquiries About the Project, Contact

Southeast Asia Commercial Joint Stock Bank
Mr. Nguyen Tuan Anh
Head of Risk
+ 84 24 3944 8688
anh.nt27@seabank.com.vn
BRG Tower, 198 Tran Quang Khai street, Hoan Kiem, Hanoi, Vietnam
https://www.seabank.com.vn

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

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.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

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.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

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.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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