IFC considers $200 million investment in VPBank sustainability bond

IFC considers $200 million investment in VPBank sustainability bond

The International Finance Corporation (IFC) is mulling a $200 million investment in a five-year sustainability bond to be privately issued by VPBank.

The proceeds of the bond will be used to expand VPBank's sustainable finance portfolio by financing eligible climate and social projects in line with the Sustainable Finance Framework to be established by the bank, which will adhere to the International Capital Market Association's Sustainability Bond Guidelines and the IFC's Climate Definitions.

The proposed IFC investment is expected to catalyse the sustainable financing activities of commercial banks in Vietnam and help create market standards for sustainable bonds issued by commercial banks.

Through the initiative, the IFC expects to contribute to the continued growth of small- and medium-sized enterprise (SME) finance in Vietnam and help address the sector's increasing financing needs by supporting the bank to grow its SME and women-owned SME loan portfolio.

Additionally, the IFC's investment, complemented by advisory support focused on climate finance, will allow VPBank to strengthen and expand its climate and sustainability business in line with its green banking strategy by implementing best practices that ensure transparency and improve monitoring and reporting.

With this project, the IFC also expects to promote greater environmental sustainability by promoting internationally recognised best practices in climate and sustainable banking and demonstrating the viability of sustainable financing instruments to other market participants, thus encouraging replication by other banks in Vietnam.

The initiative will enable VPBank to attract additional long-term funds, which are scarce in the current macroeconomic environment. As the anchor investor, the IFC is committed to subscribe up to $200 million from its own account of the total issuance amount of $300 million. The IFC's anchor role will be crucial to boosting the interest of other investors to mobilise an additional $100 million.

Furthermore, VPBank will receive the IFC's upstream and advisory services to grow its climate portfolio and expand to new climate asset classes.

VIR