Established in 1993, Vietnam Prosperity Joint-Stock Commercial Bank ("VPBank") is one of the largest private banks in Vietnam while Proparco Proparco is the private sector financing branch of Agence Française de Développement (AFD) providing financial support to environmental, climate-friendly projects and initiatives in the third world via local financial institutions.
VPBank is known as a local bank that has a particular focus on retail and SME customers, supporting segments of the economy usually underserved in terms of banking services, through its nationwide network of agencies and specialized centers for small and medium sized businesses.
Under the deal, some US$ 15 million or 30% of the loan will mainly be earmarked for climate-friendly projects and energy efficiency projects. Due to greenhouse-gas emissions, Vietnam is one of the most carbon intensive countries in the East Asia and Pacific region.
This financial deal, in alignment with the Agence Française de développement (AFD) Group's "100% Paris Agreements" objective, will increase financing for climate change mitigation in Vietnam, addressing the country’s significant need on this issue.
The remaining 70% of the loan, amounting to USD 35 million, will be dedicated to supporting VPBank’s SME financing activity. The loan will help local SMEs gain more access to bank credit and services, in the current context of less financing sources for SMEs in the country. By supporting small businesses activities, it will also contribute to creating more jobs in the country as well as promoting SDGs No. 8 Decent work and economic growth, and No. 13 Climate action.
"Vietnam is a strategic country for Proparco and the AFD Group, due to its important position in South East Asia and the first and foremost challenge, it is facing, is climate change. Its new partnership with a leading local bank will enable Proparco to reach Vietnam's financial sector, and to directly support the country's production sector as well as the green lending market," Magali Roux, Proparco’s Regional Director in Southeast Asia.
Reported by Hoang Linh