The International Finance Corporation (IFC) is extending US$140 million in total financing to two Vietnamese commercial banks to help them support businesses, especially small- and medium-sized enterprises (SMEs), that have suffered from the COVID-19 pandemic.
The IFC will provide US$100 million to VPBank and another US$40 million to Orient Commercial Joint Stock Bank (OCB) in one-year, renewable senior loans to enable local businesses with disrupted cash flows to sustain operations and maintain jobs.
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The development finance institution is also partnering with international lenders, including the Asian Infrastructure Investment Bank (AIIB), to raise additional financing to expand VPBank’s lending capacity further. AIIB will co-finance up to US$100 million to support VPBank’s COVID-19 relief initiatives to its business customers.
“SMEs are strategic client segment to VPBank and we have continuously offered various solutions to their needs given the ongoing pandemic, said Nguyen Duc Vinh, CEO of VPBank.
VPBank office building
About 20% of the working capital line for VPBank is expected to be earmarked for women-led SMEs, with blended finance funding provided by the Women Entrepreneurs Opportunity Facility, a first-of-its-kind global finance facility for women entrepreneurs launched by IFC and Goldman Sachs 10,000 Woman.
SMEs are “the backbone of Viet Nam’s economy”, said Nguyen Dinh Tung, CEO of OCB, adding that as they struggle amid 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 economy recovery process that is resilient and sustainable.
The loans to VPBank and OCB are part of IFC’s US$8 billion fast-track financing to support its private-sector clients during the COVID-19 crisis.
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“Our experience from past shocks, including the global financial crisis 2008, has taught us that micro, small and medium enterprises are especially impacted by the current crisis. Keeping them solvent it, therefore, key to saving jobs and limiting the economic damage”, said IFC country manager for Viet Nam, Cambodia and Laos, Kyle Kelhofer.
Both VPBank and OCB are exiting clients of IFC. The World Bank Group’s investment arm extended US$212.5 million financing package to VPBank in January this year and US$100 million funding to OCB earlier.
According to the General Department of Statistics’ survey results of assessing the impact of COVID-19 on production and business activities of enterprises in Viet Nam, there were 85.7% of enterprises nationwide affected by COVID-19.
57.7% of those thought that the consumption market went down sharply. 22.1% of respondents were in shortage of inputs. 45.4% of respondents were in shortage of financing for their business operations.
The survey was conducted from 10 April to 20 April 2020 in the online manner, with 126,565 responding firms, accounting for 20% of the total operating enterprises.
Reporting by Thuy Dung @ VGP
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Source: Vietnam Insider