VPBank issues $300 million sustainability bond

VPBank issues $300 million sustainability bond

VPBank reached a major milestone in its sustainable growth journey with the issuance of a landmark sustainability bond on September 15 – the first by a private bank in Vietnam.

The International Finance Corporation (IFC) is investing $200 million in the bond, which will significantly expand VPBank’s lending to smaller businesses, especially women entrepreneurs, and create tens of thousands of jobs, while also supporting climate‑friendly projects.

The five‑year, $300 million bond, privately issued to IFC and the French development finance institution Proparco as parallel investors, will finance projects delivering both social and environmental benefits under VPBank's newly established Sustainable Finance Framework (SFF).

Of the IFC's investment, 60 per cent will support lending to small- and medium-enterprises (SMEs), with half of that dedicated to women‑owned businesses. The remaining 40 per cent will fund eligible climate projects. The expansion of VPBank's SME loan portfolio is expected to create up to 38,000 jobs over the next five years, boosting incomes and economic opportunities across the country.

This issuance comes at a time when SMEs – which account for one‑third of jobs in Vietnam – continue to face significant financing gaps. At the same time, the country will require substantial investment to meet its goal of transitioning to a low‑carbon, high‑income economy by 2045. As of September 2024, climate finance represented only 4.5 per cent of the banking sector's total credit balance.

“This landmark releases represents a major milestone in VPBank's sustainable development journey and reaffirms Vietnam's capacity to connect with global green capital flows,” said Nguyen Duc Vinh, CEO of VPBank. “Proceeds from the bond will be directed towards priority green and social projects, advancing the government's net-zero commitment and fostering a prosperous, sustainable future for the country.”

Alongside its investment, and with support from the Australian government, the IFC has been providing advisory assistance to VPBank to assess green finance opportunities, build internal capacity on climate finance in line with international best practices, and develop its SFF – a critical tool guiding how an issuer mobilises and uses green funding effectively.

"This is a reopening transaction for Vietnam's banking sector and a model for other financial institutions in the country,” said Thomas Jacobs, IFC country manager for Vietnam, Cambodia, and Laos. “By anchoring VPBank's first sustainability bond and providing technical support, the IFC is helping to set market standards for sustainable finance, mobilise private capital, and channel funding to where it is most needed – SMEs, women entrepreneurs, and climate projects.”

Over the past five years, VPBank has mobilised $2 billion in sustainable finance for a wide range of green and social projects. It is also a member of the Alliance for Green Commercial Banks,an IFC initiative that equips member banks with tailored training, access to a regional peer-learning network, and opportunities for technical exchanges to help scale climate solutions.

VIR