The International Finance Corporation (IFC) is investing $200 million in Vietnam Prosperity Joint−Stock Commercial Bank (VPBank) bond, which will significantly expand the bank’s lending to smaller businesses, especially women entrepreneurs, and create tens of thousands of jobs, while also supporting climate‑friendly projects.
IFC said in a statement on Monday that 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 IFC’s investment, 60 percent will support lending to small and medium enterprises (SMEs), with half of that dedicated to women‑owned businesses.
The remaining 40 percent will fund eligible climate projects.
The expansion of VPBank’s small and medium-sized enterprise (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 represents only 4.5 percent of the banking sector’s total credit balance.
It is noted that the issuance of the landmark sustainability bond is the first by a private bank in Vietnam.
“This landmark issuance represents a major milestone in VPBank’s sustainable development journey and reaffirms Viet Nam’s capacity to connect with global green capital flows,
“Proceeds from the bond will be directed toward priority green and social projects, advancing the government’s net zero commitment and fostering a prosperous, sustainable future for the country,” said Nguyen Duc Vinh, Chief Executive Officer of VPBank.
Alongside its investment, and with support from the Australian government, 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 mobilizes and uses green funding effectively.
“This is a pioneering transaction for Viet Nam’s banking sector and a model for other financial institutions in the country,
“By anchoring VPBank’s first sustainability bond and providing technical support, IFC is helping to set market standards for sustainable finance, mobilize private capital, and channel funding to where it is most needed — SMEs, women entrepreneurs, and climate projects,” said Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia, and Lao PDR.
Over the past five years, VPBank has mobilized $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.