Established in 1993, Techcombank was one of the first private-sector banks founded in Vietnam post market liberalization initiated in the late 1980s. Current shareholding structured of the Bank is diversified. Key institutional shareholders, holding 49% of shares, comprise HSBC 20%, Masan Group 20%, a local group with focus in food and banking business, Agriseco 9%, the security company of Vietnam bank for Agriculture and Rural Development. The rest 51% is held by 1,647 smaller institutional and individual investors. Techcombank, while not yet listed, is traded in the local over-the counter market. In August 2009, Moody’s assigned Techcombank with ratings of B1 (negative outlook) for long term and short term local and foreign currency issuance which is constrained by the country ceiling and if the ceiling was lifted the deposit ratings would be upgraded. The BFSR rating was D- (stable outlook) which equates to base line credit assessment of Ba3. As of September 2009, Techcombank’s total assets amounted to more than VND 86,492 billion ($ 5,059 million) and equity of VND 7,110 billion ($ 419 million).

The proposed US$ denominated loan to Techcombank is $ 25 million with tenor of up to 7 years for the purpose of supporting Techcombank’s lending to energy efficiency (EE) projects, with target to reach a total EE financing portfolio of US$ 50 million.

24.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	24.0
Equity

* These investment figures are indicative

Techcombank is headquartered in Hanoi, Vietnam. As of October 2009 Techcombank’s branch and transactions offices amounted to 186 in 35 cities and provinces of Vietnam. Techcombank’s clients include corporate, SMEs and retail individuals. As of September 2009 the banks’ customer base reached 50,390 corporate and SMEs and 835,570 retail customers. Investments can be made through out Vietnam.

Environmental benefits – By providing CPEE financing support to the efficiency improvement of energy and other resource uses, this Project will help Viet Nam reduce the emissions of carbon dioxide and greenhouse gases, and significant savings in the use of raw material, water and other limited resources through the improvement of efficiency. SME access to finance - In Viet Nam, SMEs have been traditionally perceived high risk by financial institutions, therefore did not receive sufficient financing support. Moreover, CPEE financing is more unattainable to SMEs. This Project will provide CPEE financing support to mostly SMEs through the local FI partner, which will break through the misconception and build a model for other financial institutions.

Demonstration impact to the market - Public concerns over energy shortage & pollution issues have been increasing recently, however participation from a private sector in this new area is still very limited. Supporting CPEE will encourage private lenders to provide financing to other CPEE projects in a commercially viable manner. If committed, the project will be the first of its kind in Vietnam. Therefore it is hoped that IFC’s first movement in this industry will increase motivation and set standards for other lenders and investors to follow in the country.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze the FI’s expected portfolio and sectors of investment and determine the Applicable Requirements, that would include a combination of (i) The IFC FI Exclusion List and/or (ii) The applicable National Social and Environmental Laws and regulations and/or (iii) The IFC Performance Standards. IFC will also review the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). IFC may suggest Supplemental Actions to address any gaps in the SEMS if required. The FI will be required to: (i) Develop and, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC (ii) Identify responsible, qualified persons to manage and implement the SEMS (iii) Commit to implementing the SEMS to ensure that its investments/activities are in compliance with the Applicable Requirements (iv) Take action to remedy any gaps in SEMS implementation on an ongoing basis (v) Submit an annual environment performance report (AEPR) to IFC as per a format to be agreed with IFC. IFC may ask to review the first few sub-projects prior to the Bank''s lending decisions to ensure that the SEMS is performing adequately in client risk screening.

Given that this project highlights climate change benefits as a key investment rationale for IFC, the FI will be required to estimate the abated greenhouse gas emissions (tons of CO2-equivalent) of each of its borrowers, using an internationally recognized calculation methodology. Estimates for the past year’s loan portfolio should be recorded in the current year AEPR submitted to IFC, and a sample of the calculation methodology should be provided to IFC. The FI should be prepared to have its SEMS officer trained to do this, or commission external consultants, in a cost-effective way.