IFC loans to VPBank and OCB to boost finance for local businesses
The International Finance Corporation (IFC) is providing $140 million in loans to VPBank and OCB to help the two banks support local businesses with disrupted cash flows sustain operations and maintain employment.
The IFC will provide altogether $140 million to the two banks
The pandemic has severely impacted Vietnamese businesses including small- and medium-sized enterprises (SMEs), a key driver of Vietnam’s economic growth over the past two decades. Guided by the State Bank of Vietnam, VPBank and OCB have rolled out various relief measures for their SME clients impacted by COVID-19.
As part of its COVID-19 fast-track financing support package, the IFC is providing VPBank with $100 million and OCB with $40 million in one-year renewable senior loans. The funding will provide the two banks with additional liquidity to continue lending to businesses as these banks are offering payment relief to their borrowers at the same time.
The IFC is also partnering with international lenders including the Asian Infrastructure Investment Bank (AIIB) to mobilise an additional financing package to further expand VPBank’s lending capacity to local businesses impacted by the pandemic. AIIB will be co-financing up to $100 million to support VPBank’s trade finance and working capital finance to Vietnamese enterprises, including SMEs, during the COVID-19 crisis.
“SMEs are a strategic client segment to VPBank and we have been continuously offering various solutions to their needs, given the ongoing pandemic. The IFC’s working capital line will enable VPBank to assist many more businesses, helping them weather an acute external shock as well as supporting broader financial market stability in Vietnam,” said Nguyen Duc Vinh, VPBank CEO.
About 20 per cent of the working capital line for VPBank is expected to be earmarked for women-owned SMEs, with blended finance funding provided by the Women Entrepreneurs Opportunity Facility (WEOF).
The WEOF is a first-of-its-kind global finance facility dedicated to expanding access to capital for women entrepreneurs. It was launched in 2014 by the IFC, through its Banking on Women and Goldman Sachs' 10,000 Women programmes.
“At this period of time, OCB aims to support SMEs because they are the backbone of Vietnam’s economy. As they struggle amidst the ongoing COVID-19 situation, IFC’s timely and rapid support will play a significant role in helping them cope with this unprecedented global crisis, contributing to an economic recovery process that is resilient and sustainable,” said Nguyen Dinh Tung, OCB CEO.
The IFC is providing $8 billion in fast-track financing to support private-sector clients during the COVID-19 crisis. The bulk of IFC’s financing is going to client banking institutions, enabling them to continue to offer trade financing, working capital support, and medium-term financing to companies struggling with disruptions in supply chains, especially SMEs.