Large offshore loans fuel Vietnamese banks, firms

Major international financial institutions have been providing several Vietnamese banks and companies with large loans to bolster their growth.

World Bank investment arm IFC has completed the disbursement of a $150 million five-year loan to VPBank, the Hanoi-based lender said Monday.

The new proceeds would be used to finance small- and medium-sized enterprises (SMEs), women-led enterprises, and projects in environmental protection and climate change response in Vietnam.

The Asian Development Bank (ADB) and VPBank signed a loan package of up to $500 million on November 11 to expand access to finance for women-owned SMEs, shortly called WSMEs, and social loan projects in Vietnam.

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 of $100 million from Japan’s Sumitomo Mitsui Banking Corporation (SMBC), $100 million from 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 Cooperation Agency (JICA) and SMBC and signed in October 2021.

“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,” Ashok Lavasa, ADB vice president for private sector operations and public-private partnerships, said on November 11.

The parallel loans were jointly mobilized by ADB and SMBC, who were also joint mandated lead arrangers and bookrunners for the JICA facility.

VPB is a leading joint stock bank in Vietnam with robust digital platforms that help meet the needs of its retail and SME customers using innovative and customized products.

Three IFC disclosures seen on November 22 showed that the giant investment institution had proposed investments totaling $320 million in three Vietnamese banks to support their loan portfolios for SMEs and housing finance. The three banks are private lenders SHB, VIB, and OCB.

The first proposal is a $120 million, three-year senior loan for Hanoi-based SHB. The other two are for VIB and OCB, both based in Ho Chi Minh City, at $100 million each, via two five-year loans.

Another IFC disclosure seen on November 10 showed that the World Bank institution had proposed a $100 million senior loan with five years in tenor to Hanoi-based SeABank, to be exclusively used for the Vietnamese lender’s housing portfolio.

As affordable housing is part of the commercial bank’s plans, the proceeds, expected to be approved by the IFC board this December, would also go to this business, according to the disclosure.

SeABank has 174 branches and transaction offices nationwide as of June 30, 2022. It provides a wide range of commercial banking products and services to both retail and commercial clients through the network. It is Vietnam’s 12th largest private bank in terms of assets, totalling $9.9 billion, IFC says.

Also on November 10, SeABank said it had received a $200 million seven-year loan from the U.S. International Development Finance Corporation (DFC) to support SME finance while addressing climate issues.

DFC is the U.S. government’s development finance institution that uses financial tools to promote private investment in developing countries. DFC prioritizes economic and financial soundness.

Prior to the DFC disbursement, SeABank received a five-year convertible loan of $75 million from IFC this October to support its growth and increase targeted lending to SMEs.

IFC, in partnership with the Swiss State Secretariat for Economic Affairs (SECO), is scaling up its support to Vietnam’s government to promote sustainable finance and spur private sector investment.

A memorandum of understanding was signed by IFC and Vietnam’s State Securities Commission, or SSC, in Hanoi on November 11 to support government efforts to leverage the capital market to tackle climate change through green and sustainable finance.

With IFC’s assistance, SSC will promote the adoption of environmental, social, and governance (ESG) standards and practices, and enforce ESG requirements among market players.

On the same day, HSBC Bank Vietnam said it had worked with other financial institutions to provide a $600 million syndicated loan to Vietnamese conglomerate Masan Group and its subsidiary The Sherpa Company Ltd.

HSBC Vietnam acted as joint mandated lead arranger, underwriter and bookrunner on the major transaction.

The five-year facility marks the largest and longest tenor syndicated loan Masan has ever obtained. Up to 37 lenders had joined this syndication, and the total amount was upsized to $600 million from the initial target of $375 million, according to HSBC Vietnam.

Masan said Tuesday that it has received the entire syndicated loan, which is priced at 2.9% over the U.S Dollar Secured Overnight Financing Rate (SOFR), or about 6.7% per annum, with margin over the reference rate improving by 35 basis points compared to its $200 million syndicated loan completed in 2020.

Late this October, major Vietnamese agri-business Loc Troi Group secured a $100 million credit package provided by Vietnam’s MB Bank and six foreign banks under a three-year syndicated loan to expand high-quality rice production.

The six foreign lenders are Kasikornbank of Thailand; First Commercial Bank, E.SUN Commercial Bank of Taiwan; Agricultural Bank of China Limited - Hanoi branch; China Construction Bank Corp. - HCMC branch; and CTBC Bank Co. Ltd (mainland China).

According to Loc Troi Group chairman Huynh Van Thon, his corporation expects to raise another $1 billion from the international capital market to develop one million hectares of high-quality rice in Vietnam.