16:28 (GMT +7) - Thursday 19/07/2018

Banking & Finance

$100 mn IFC-led financing package for TPBank

Released at: 14:32, 10/07/2018

$100 mn IFC-led financing package for TPBank

Photo: IFC

IFC providing syndicated loan of $100 million to TienPhong Commercial Joint Stock Bank.

by Minh Do

The IFC, a member of the World Bank Group, is providing a syndicated loan of $100 million to the TienPhong Commercial Joint Stock Bank (TPBank).

The IFC-led financing package will help the bank further extend long-term funding to micro, small and medium enterprises (MSMEs) and individual borrowers through digital delivery channels.

A lack of financial access is one of the key challenges for MSMEs, which employ about 77 per cent of Vietnam’s workforce and contribute some 41 per cent of the country’s GDP. Around 70 per cent of MSMEs have unmet financing needs, resulting in a $23.6 billion financing gap, equivalent to 12 per cent of GDP.

Given this scenario, IFC’s long-term funding commitment will enable TPBank to double its MSME portfolio over the next five years, providing more than $1.8 billion in some 46,000 loans by 2022. Up to 65 per cent of transactions will be conducted digitally.

Shifting to a cashless system is a priority for the government, to increase efficiency, promote business and economic development, and reduce poverty in remote rural areas where it is difficult to reach traditional financial providers.

The five-year financing package, comprising $60 million from the IFC’s own account, $22.5 million from the multi-investor Managed Co-Lending Portfolio Program (MCPP) managed by the IFC, and $17.5 million from the Industrial and Commercial Bank of China Ltd., Hong Kong Branch, under IFC’s B Loan Program, is likely to improve the competitiveness of Vietnam’s banking sector by promoting a cashless economy via innovation and competition. It is also expected to create between 35,000 and 56,000 jobs over the next five years.

“The much-needed syndicated funding from the IFC and international lenders will help TPBank implement a long-term digital strategy to capture digital demographic growth opportunities and increase its reach to the unbanked and underserved segments,” said TPBank’s CEO Nguyen Hung.

“This syndicated facility is expected to have a catalytic impact on Vietnam’s banking sector, which is at a key juncture of mobilizing the long-term private funding needed to support the country’s key goals of developing SMEs and creating jobs.” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos. “The large mobilization component sends a strong signal to the market, creating a demonstration effect of private sector financing for this key sector.”

The partnership between the IFC and TPBank began in early 2016 with a trade finance guarantee of $10 million under the IFC’s Global Trade Finance Program (GTFP). The trade finance line has been expanded over the years, with a current limit of $60 million, allowing the bank to help more local companies increase trade, generate foreign exchange, and create employment opportunities.

The IFC currently owns 4.387 percent of the bank’s equity capital after its quasi-equity investment in May 2016 was converted into equity. In addition to financing, IFC has been helping the bank strengthen its corporate governance and connecting it with a network of innovative financial service providers in the region.

 

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