16:27 | 13/07/2018 Economy
The International Finance Corporation (IFC) and Tien Phong Commercial Joint Stock Bank (TPBank) have inked a deal under which the IFC will provide a syndicated loan of US$100 million to help TPBank extend long-term funding to mirco-, small- and medium-sized enterprises (MSMEs), and individual borrowers through digital delivery channels.
|At the signing ceremony - Photo: VNA|
The five-year financing package is likely to improve the Vietnamese banking sector’s competitiveness by promoting a cashless economy via innovation and competition.
It is expected to create between 35,000 and 56,000 jobs over the next five years.
A lack of financial access is one of the key challenges for MSMEs, which employ about 77 percent of Vietnam’s labor force and contribute to around 41 percent of the country’s GDP.
According to the IFC - the financial arm of the World Bank (WB) - about 70 percent of MSMEs have financing needs, resulting in a US$23.6 billion gap, equivalent to 12 percent of GDP.
The IFC’s long-term funding commitment will enable TPBank to double its MSME portfolio over the next five years, providing more than US$1.8 billion in about 46,000 loans by 2022. Notably, up to 65 percent of the transactions will be made digitally.
The much-needed syndicated funding from the IFC and international lenders will help TPBank to implement a long-term digital strategy to capture the digital demographic growth opportunity and increase its reach to the unbanked and under-served segment, said TPBank CEO Nguyen Hung.
The syndicated facility is expected to have a catalytic impact for the Vietnamese banking sector, which is at a key juncture of mobilising long-term private funding needed to support the country’s key development goals of developing SMEs and creating jobs, said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos.
The IFC-TPBank partnership started in early 2016 and has expanded over the years, allowing the bank to help more local companies increase trade, generate revenues and create employment opportunities.