16:21 (GMT +7) - Tuesday 25/09/2018

Banking & Finance

IFC & VPBank finance Tan Long Group

Released at: 14:39, 12/07/2018

IFC & VPBank finance Tan Long Group

Photo: Duc Anh

Commodity financing facility of up to $50 million extended to leading commodity trader.

by Linh San

The IFC has partnered with the Vietnam Prosperity Commercial Joint Stock Bank (VPBank) to extend a commodity financing facility of up to $50 million to the Tan Long JSC (Tan Long Group), one of Vietnam’s leading commodity traders.

The facility will enable the Group to diversify its procurement of agri-commodities and is part of the IFC’s Global Warehouse Finance Program (GWFP), which increases available financing to agricultural producers and traders in agriculture-intensive countries such as Vietnam.

“Diversifying trade finance products will help realize VPBank’s strategy of becoming a leading SME bank over the next five years, with support for local importers and exporters as a pillar,” said Mr. Dinh Van Nho, VPBank’s Deputy Chief Executive Officer and Head of the Corporate Banking Division.

The initiative also reflects the IFC’s priorities in Vietnam of supporting the banking sector and strengthening intermediaries in the agribusiness value chain.

“Vietnam’s agriculture sector is at a turning point, with growth increasingly leveraging increased efficiency, diversification, and value addition,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos. “These types of partnerships with VPBank and the Tan Long Group are key steps in enhancing the competitiveness of the agribusiness value chain in Vietnam.”

Underpinning the deal is a 50:50 risk-sharing partnership between the IFC and VPBank, with each participating in risk for up to $25 million on an unfunded basis covering half of every eligible transaction under the facility.

The partnership is expected to have a significant development impact on the animal protein value chain in Vietnam - an increasingly important sector in the country - as it will enable the Tan Long Group to procure, store and distribute raw materials more effectively and efficiently.

“It will not only help Tan Long consolidate its position as a market leader in soft commodity trading through diversifying procurement of high-quality agri-commodities at lower costs, it will also increase efficiency of other agribusiness value chain participants and Vietnam’s agribusiness sector in general,” said Ms. Nguyen Thi Thanh Van, Deputy General Director of the Tan Long Group.

The GWFP supports the agriculture sector by providing banks with liquidity or risk coverage backed by warehouse receipts, which can be used to provide financing in the form of short-term loans or guarantees to agricultural producers and traders. To date, the GWFP has supported more than $6 billion in global trade and more than 750,000 farmers in 66 emerging market countries.

The IFC, a sister organization of the World Bank and a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. It works with more than 2,000 businesses worldwide, using its capital, expertise, and influence to create markets and opportunities in the toughest areas of the world.

In FY17, the IFC delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity.

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