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ADB, commercial lenders provide $300mn for Vietnam bank to support SMEs

Saturday, December 15, 2018, 11:53 GMT+7
ADB, commercial lenders provide $300mn for Vietnam bank to support SMEs
Michael Barrow (right), director general of ADB’s private sector operations department, and Le Ngoc Lam (left), BIDV’s senior executive vice-president in charge of the board of management, sign the loan agreement at a ceremony in Hanoi on December 12, 2018. Photo: ADB

The Asian Development Bank (ADB) and the state-run Bank for Investment and Development of Vietnam (BIDV), the country’s largest commercial bank by assets, have agreed on a US$300-million loan to support the growth and productivity of small and medium-sized enterprises (SMEs) in Vietnam, ADB announced this week on its website.

The agreement was signed by Michael Barrow, director general of ADB’s private sector operations department, and Le Ngoc Lam, BIDV’s senior executive vice-president in charge of the board of management, at a ceremony in Hanoi.

According to the deal, the facility is comprised of a senior trust A loan of $200 million provided by ADB and a B loan of $100 million from 12 commercial lenders from South Korea, mainland China and Taiwan and divided into a three-year tranche and a five-year tranche.

“ADB’s partnering with BIDV, the largest lender to the country’s SME sector, will boost lending to businesses, which often find it challenging to gain access to finance,” the website on Wednesday quoted Barrow as saying at the signing ceremony.

“BIDV’s effort to make SME lending a key strategic priority is aligned with ongoing endeavors by ADB and the Government of Vietnam to improve access to finance for SMEs, thereby contributing to inclusive economic growth.”

The loan also marks ADB as the first development finance institution to provide long-term lending to BIDV.

“The facility will support SMEs in Vietnam and also reaffirms our partnership with ADB in achieving poverty reduction, economic growth, regional integration, and environmental protection,” said Phan Duc Tu, chairman of BIDV.

“The loan symbolizes the long-term cooperation between ADB and BIDV for sustainable development in Vietnam.”

SMEs account for a majority of businesses in Vietnam, contributing around half of total employment and 40 percent of gross domestic product.

Despite their significant contribution to the economy, SMEs still encounter numerous obstacles that inhibit their economic potential, including lack of access to finance needed for expansion.

In recent years, BIDV has increasingly served the SME segment, which has resulted in positive outcomes.

The state-run bank had 250,000 SME customers, accounting for almost 40 percent of the total SME customers in the Southeast Asian country, as of June.

Its lending portfolio to SMEs reached over VND240 trillion ($10.4 billion), giving it the largest share of SME lending among the country’s banks.

It has also been awarded “Best SME Bank Vietnam 2018” by the UK’s online and print magazine Global Banking and Finance Review, “SME Bank of the Year” by Singapore’s Asian Banking & Finance, and “Best SME Bank Vietnam 2018” by the institutional investment magazine Alpha Southeast Asia.

At the Wednesday signing ceremony, ADB also said that it would work with BIDV to maximize the positive social and environmental impacts of the assistance by implementing an environmental and social management system.

ADB stated that it is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.

Established in 1966, it is owned by 67 members, 48 of which are in the Asian region.

In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in co-financing.

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Bao Anh / Tuoi Tre News

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