Vietinbank is currently 89.23% owned by the Vietnamese Government. Other shareholders include: (i) staff (1.82%), (ii) retail investors (4.76%), (iii) labor union members (2.38%), and (vi) local institutional investors (1.81%). The Government plans a further divestment of its stake in the Bank down to 51%.

The investment is expected to comprise: (i) up to $186 million in equity for an ownership of up to 10%, subject to management approval, by the IFC Capitalization (Equity) Fund, LP and IFC jointly, and (ii) $125 million in subordinated debt through IFC Capitalization (Subordinated Debt) Fund, L.P. (collectively, the “CapFund”). The CapFund is a $3 billion global equity and subordinated debt fund established in 2009 by IFC and Japan Bank for International Cooperation (“JBIC”), managed by IFC Asset Management Company, LLC, a wholly-owned subsidiary of IFC.

The Bank’s headquarters is located in Hanoi, the capital city of Vietnam. In addition to the head office, the Bank also has 3 main operation centers, a network of 155 fully-functioning branches, over 900 transaction and savings offices across all provinces of Vietnam, and nearly 1,300 ATMs. The Bank can make loans throughout the country.

The Project will achieve a strong development impact by demonstrating IFC’s commitment in supporting Vietnam financial market reform, including the following: improving the capital adequacy of the third largest local bank which is of systemic importance for Vietnam. The project will demonstrate IFC’s continued commitment to Vietnam’s financial market through assisting the state- owned bank to increase its capital to meet business expansion needs and pursue its privatization and modernization plan amid global financial turmoil. focusing on SME lending; IFC’s investment will assist the Bank to expand its SME loan portfolio to reach clients through its wide network in all cities and provinces of Vietnam, thus supporting employment generation, livelihood improvement and private sector growth.

IFC’s additionality stems from IFC’s ability to engage strategically with Vietinbank and its main shareholder to ensure that the privatization plan helps restore investor confidence and builds enterprise value. The planned cooperation with IFC will help Vietinbank in speeding up the process of selecting a foreign strategic shareholder and will encourage the Government to continue pursuing its divestment program. IFC’s additionality also includes the multi-faceted advisory service package that will be provided to Vietinbank.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC analyzed the FI’s portfolio and determined the Applicable Performance Requirements that may include a combination of the IFC FI Exclusion List, the applicable National Social and Environmental Laws and regulations and the IFC Performance Standards.

IFC also appraised the FI’s labor practices according to the IFC’s Performance Standards 2: Labor and Working Conditions and reviewed the FI’s capacity to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the project will be required to:

Develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC;
Identify responsible, qualified persons to manage and implement the SEMS;
Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements;
Demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions;
Submit a period report to IFC as per a format to be provided by IFC