IFC and VPBank cooperate in $50 million commodity financing
IFC and VPBank cooperate in $50 million commodity financing
IFC, a member of the World Bank Group, in partnership with Vietnam Prosperity Commercial Joint Stock Bank (VPBank) is extending a commodity financing facility of up to US$50 million to Tan Long Group Joint Stock Company in order to unlock further agri-financing opportunities in this high-potential sector.
This commodity financing support helps Tan Long Group, one of Viet Nam’s leading traders in agricultural products, diversify procurement of agri-commodities. It is also part of IFC’s Global Warehouse Finance Programme (GWFP) that increases available financing to agricultural producers and traders in the countries where agriculture plays an important role in the economy such as Viet Nam.
Underpinning the deal is a 50:50 risk-sharing partnership between IFC and VPBank, with each assuming liability for up to $25 million on an unfunded basis covering half of every eligible transaction under the facility.
“Diversifying trade finance products will help realise VPBank’s strategy of becoming a leading bank in supporting enterprises over the next five years, with supporting local importers and exporters as a pillar,” said Dinh Van Nho, VPBank’s deputy chief executive officer cum head of Corporate Banking Division.
This partnership is expected to have a significant development impact on the animal protein value chain in Viet Nam — an increasingly important sector in the country — as it will enable Tan Long Group to procure, store and distribute raw materials more effectively and efficiently.
“Viet Nam’s agriculture sector is at a turning point, with growth increasingly leveraging increased efficiency, diversification and value-addition. These types of partnerships with VPBank and Tan Long Group are key steps to enhance the competitiveness of the agribusiness value chain in Viet Nam,” said Kyle Kelhofer, IFC Country Manager for Viet Nam, Cambodia and Lao PDR.
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.
