ADB, VPB signed US$500 million social loan package

Saturday, Nov 12, 2022 06:57

The financial package will help VPB design new products and procedures to enhance its support to WSMEs. — Photo courtesy of the bank

ADB and VPB have signed a loan package of up to US$500 million to expand access to finance for women-owned small and medium-sized enterprises (WSMEs) and social loan projects.

The financing comprises a $100 million loan from ADB’s ordinary capital resources that will be dedicated to WSME financing and a $300 million syndicated parallel loan with $100 million from the Sumitomo Mitsui Banking Corporation (SMBC), $100 million from the Australia and New Zealand Banking Group (ANZ), and $100 million from Maybank Securities Pte Ltd. The financial package also includes a $100 million facility that was co-financed by Japan International Co-operation Agency (JICA) and SMBC and signed last October 2021.

The parallel loans were jointly mobilised by ADB and SMBC, who were also joint Mandated Lead Arrangers and book runners for the JICA facility. They will be used to support micro, small, and medium-sized enterprises (MSMEs) and social loan projects. Social loans finance activities and projects that address social issues or achieve positive social outcomes. Eligible projects can include loans to MSMEs and WSMEs, support for public and private healthcare products and services, development of public and private educational infrastructure facilities, and support for affordable housing.

“COVID-19 has severely affected many businesses, so improving their access to finance is a vital step to post-pandemic recovery, particularly for women-run businesses which face greater difficulties in accessing capital,” said ADB Vice-President for Private Sector Operations and Public–Private Partnerships Ashok Lavasa.

“ADB is pleased to be working with VPB and in partnership with the Women Entrepreneurs Finance Initiative (We-Fi) to improve access to finance for underserved female borrowers' in Viet Nam.”

SMEs account for 40 per cent of Viet Nam’s gross domestic product and half of all employment. Access to commercial finance is a challenge, particularly for women borrowers who often face constraints such as lack of collateral, low financial literacy, higher risk perception by banks, and limited awareness among banks of the potential of the women’s market.

The financial package will help VPB design new products and procedures to enhance its support to WSMEs. A $750,000 performance-based grant funded by We-Fi will incentivize VPB to expand its services to female borrowers and undertake a first-of-its-kind randomised control trial study in Viet Nam on financial inclusion for WSMEs.

“These funds will help VPB promote lending programs for SMEs, WSMEs, and other companies providing services such as health care, education, sanitation, and transport, by giving them access to relatively low-cost capital,” said VPB CEO Nguyen Duc Vinh.

VPB is a leading joint-stock bank in Viet Nam with robust digital platforms that help meet the needs of its retail and SME customers using innovative and customized products. VPB’s Social Finance Framework is aligned with internationally recognized Social Bond Principles and Social Loan Principles and has been reviewed and evaluated by Morningstar Sustainalytics, a global leader in environmental social governance research. — VNS

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