On June 30, Vietnam Prosperity Joint Stock Commercial Bank (VPBank) signed a credit contract with the International Finance Corporation (IFC), a member of the World Bank Group, to enhance the ability to support customers. In particular, businesses, especially small and medium enterprises (SMEs), faced difficulties in cash flow disruption by COVID-19 pandemic.
Artwork (Source: VPBank).
Under the agreement, IFC will provide a US $ 100 million loan to VPBank for a one-year term, which can be extended at maturity, with Libor + 1.25% per annum. This loan will help VPBank enhance liquidity to continue providing new loans to corporate customers, while at the same time extending the repayment period of businesses.
VPBank is also encouraged to dedicate about 20% of the loan to fund women-owned businesses.
IFC is also working with international financial institutions, including the Asian Infrastructure Investment Bank (AIIB) to mobilize an additional financing package to further enhance the ability to lend businesses affected by pandemic.
AIIB will co-finance a loan of up to USD 100 million to support VPBank to expand trade finance and working capital funding for Vietnamese businesses, including SMEs, to overcome the COVID-19 crisis.
As one of the most active banks in the SME business segment, with the number of SME customers accounting for about 10% of the total number of SMEs nationwide, VPBank quickly launched customer support policies right from the start of the outbreak in Vietnam last February.
Specifically, the bank has implemented measures to reschedule, restructure and support preferential interest rates depending on customers according to the guidelines of the State Bank to support customers facing temporary difficulties due to disease verb.
In the first half of 2019, VPBank also provided thousands of billion VND of new loans with preferential interest rates to customers affected by COVID-19. In parallel with the webinar chain “Reacting to COVID-19” for small and medium enterprises at the peak of the epidemic, an online training program called “Small Business Academy” was also organized by the bank, to support assisting small businesses to transform their business into online channels to help customers maintain business revenue during the season.
“Small and medium enterprises are a strategic customer segment for VPBank and we have constantly introduced new solutions and policies to meet the needs of this segment in the context of a pandemic that is adversely affecting.
IFC’s credit will allow VPBank to support more businesses, help businesses overcome this external shock as well as stabilize Vietnam’s overall financial market, “said Nguyen Duc. Vinh, General Director of VPBank, said.
“Our experience from past shocks, including the 2008 global financial crisis, gave us a lesson that small and medium enterprises are the ones that will be affected. “Because of the current crisis, maintaining these companies’ liquidity plays an important role in maintaining jobs and limiting economic losses,” said Kyle Kelhofer, Country Director of IFC in Vietnam, Cambodia and Laos.
“Our support for VPBank not only helps the bank to extend the repayment period for many customers, but also facilitates the bank to grant new loans to small and medium-sized businesses, helping businesses continue continue to operate and maintain jobs, thereby promoting the recovery of Vietnam’s economy, “continued Mr. Kelhofer.
This is the second time IFC has granted credit to VPBank this year. In January, IFC and other international co-sponsors granted VPBank a medium-term green credit worth US $ 212.5 million. This is the first green syndicated loan transaction in Vietnam market.
The signing of this agreement demonstrates VPBank’s firm commitment to its sustainable development strategy in combination with environmental protection in line with the directions of the State Bank and the Government. This loan package marks an important milestone for VPBank and opens the opportunity to pioneer in the green financial market in Vietnam.
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