46984 - SHB Senior Loan

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Summary of Investment Information

Project Number

46984

Company Name

SAIGON - HANOI COMMERCIAL JOINT STOCK BANK

Date SPI Disclosed

Nov 18, 2022

Country

Viet Nam

Region

East Asia and the Pacific

Projected Board Date

Feb 28, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Apr 16, 2023

Department

CF4S4 - Regional Industry - FIG Asia & Pac/FIG Inv Ops East Asia & Pacific

Industry

Financial Markets

Previous Events

Approved : Feb 27, 2023
Signed : Mar 14, 2023
Invested : Apr 13, 2023

Sector

Commercial Banking - General

Project Description

The proposed investment (the “Project”, or the “Loan”) is a 3-year senior USD-denominated loan of (i) up to US$120 million A Loan on IFC’s own account and (ii) Parallel loan(s) of up to US$50 million including a green-shoe option, on best effort basis, to Saigon-Hanoi Commercial Joint Stock Bank (“SHB”, or the “Bank”). The Loan will be used to support the growth of SHB’s small and medium enterprises (“SMEs”) loan portfolio, including Women-owned SMEs (“WSMEs”) and SMEs participating in supply chain finance (“SCF”) program. In addition, IFC proposes to establish a trade finance guarantee facility of US$75 million under its Global Trade Finance Program (GTFP) with tenors of up to 12 months to support SHB’s trade finance business. The Project will be supported by Women Entrepreneurs Finance Initiative (We-Fi) and the Women Entrepreneurs Opportunity Facility (WEOF) through a performance-based incentive (“PBI”) of up to US$ 226,000, provided the Bank achieves agreed targets.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	120.0
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
Syndications	Loans to SME Borrowers
Straight Senior Loan	Loans to SME Borrowers

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

Development Impact

The development impact of the Project will be delivered through (i) increased access to finance for SMEs including WSMEs, (ii) increased access to finance for SMEs participating in the SCF financing, and (iii) strengthened institutional readiness and capacity of local banks to offer SCF solutions and improved financial connectivity and integration of SMEs in domestic and global value chains and improved access to formal finance at more favorable terms.

In term of financial additionality, the Project will provide SHB with a stable source of medium- to long-term funding, which is not readily available in the market. The Project’s non-Financial Additionality would potentially be supported by IFC’s advisory services to improve the Bank’s corporate governance, internal audit and risk management functions, and to enhance their product offerings in the areas of SCF. Also, IFC will guide the Bank to develop and implement an Environmental and Social Management System (ESMS) for its SME business. Blended Finance Section: Assuming that the Project will fully reach the agreed impact targets, IFC as implementing entity of the Women Entrepreneurs Opportunity Facility (WEOF) and the Women Entrepreneurs Finance Initiative (We-Fi) blended finance facilities is expected to provide up to US$0.226 million (equivalent to up to 0.08% of the total project cost of US$ 300 million) as a PBI to support additional on-lending to underserved WSMEs in Vietnam. IFC is open to engaging further with financial institutions and consider structures similar to the one proposed in this investment with the support We-Fi. As is the case with all of IFC’s blended concessional finance co-investments, this project has been assessed against the Enhanced Blended Concessional Finance Principles for DFI Private Sector Operations adopted by IFC and more than 20 other DFIs in 2017. Further information on these Enhanced Principles and IFC’s blended finance approach and governance, and details and historical information on estimated subsidy levels in IFC’s blended finance portfolio can be found at: www.ifc.org/blendedfinance.

E&S Category Rationale / Risks and Mitigation

The proposed project is a senior loan facility for supporting Saigon-Hanoi Commercial Joint Stock Bank (SHB or the Bank) growth of SME lending activities including supply chain finance and Women SME financing. The project will also support SHB’s short-term trade finance activities, through IFC’s Global Trade Finance Program. The project will not support any higher risk business activities involving 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. Coal-related activities including coal mining, coal transportation or coal-fired power plants, and infrastructure services exclusively dedicated to support any of these activities will be excluded from the project. The project has been categorized as a Category FI-2 project according to IFC Sustainability Policy. The activities to be supported by the project are expected to have moderate E&S risks, that are a few in number, generally site-specific, largely reversible and can be readily addressed through mitigation measures. The applicable E&S performance requirements for the SME lending will be IFC Exclusion List and relevant host country E&S laws and regulations (applicable E&S performance requirements for the trade finance activities will be IFC Exclusion List and other exclusions deemed necessary). The project’s main E&S risks relate to the SME financing activities of SHB, which may include occupational health and safety, pollution, waste and wastewater, labor and working conditions issues, among others. SHB will be required to implement an Environmental and Social Management System (ESMS) to assess and manage the E&S risks consistent with the applicable E&S performance requirements.

SHB has in place an ESMS since 2018. The ESMS components include the exclusion list screening, reputational E&S risk screening, collecting environmental legal compliance documents and portfolio E&S monitoring. For this project, SHB will be required to nominate an E&S officer and strengthen its existing ESMS through incorporating and implementing an E&S procedure to carry out comprehensive E&S legal compliance verification, among others. The Bank will carry out periodic review of ESMS implementation to ensure efficiency. SHB will also enhance its Human Resource policies and procedures to align with IFC Performance Standard 2 on Labor and Working Conditions

Contacts

For Inquiries About the Project, Contact

Saigon-Hanoi Commercial Joint Stock Bank
Nguyen Thi Tuyet Hanh
Deputy Head of International Project Management Department
+84 983 901 386
hanh.ntt@shb.com.vn
77 Tran Hung Dao, Hoan Kiem Street, Ha Noi, Vietnam
https://www.shb.com.vn/

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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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Task Title & Description	Anticipated Completion Date
ESMS officer nomination	12/31/2022
E&S training	03/31/2023
ESMS upgrade	06/30/2023
HR polices and procedures enhancement	03/31/2023

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