IFC and Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) signed on Wednesday a Memorandum of Understanding (MoU) to become strategic partners, supporting small and medium enterprises (SMEs) to scale up finance and participate in global supply chains, including financing the high-tech agricultural chain.

The signing took place on the occasion of Vietnamese Prime Minister Pham Minh Chinh’s ongoing visit to the U.S. to attend the ASEAN-U.S. Special Summit in Washington, D.C..

This cooperation is expected to help HDBank build its supply chain finance (SCF) portfolio of US$1 billion in the next three years, accordingly growing its SCF portfolio – currently active in construction materials, agribusiness sectors, FMCG as well as supporting industries and downstream petroleum distribution. 

IFC will assist HDBank to design an SCF strategy for the agricultural sector, broaden its SCF products – especially supplier and distributor financing – and bring on board anchor firms along with their suppliers and distributors, among others.

“SCF that links buyers, suppliers, and financial institutions will efficiently support the trade cycles,” said Pham Quoc Thanh, CEO of HDBank.

“IFC’s timely support will enable local businesses to leverage emerging trade opportunities and improve their linkages to formal supply chains, contributing to Vietnam’s economic growth.

“It will further help HDBank realize its vision to be among the top banks in the country with a core focus on SME and retail banking, while emphasizing value chain financing and growing its anchor client base.

“Also, agriculture chain is an important target industry for us, especially high-tech and green agriculture.”

Small and medium enterprises are the backbone of the economy and essential to Vietnam’s goal of becoming a manufacturing hub in the region, said Stephanie von Friedeburg, Senior Vice President, Operations at IFC.

“IFC’s support to domestic financial institutions as HDBank will contribute to increase SMEs’ linkages with the global supply chains and open up the opportunities for development and job creation,” Friedeburg said. 

On April 14, IFC granted HDBank a trade finance limit of $40 million within the framework of the Global Trade Finance Program (GTFP) to enhance payment risk guarantee capacity in trade finance for domestic enterprises, mainly SMEs.

In 2021, IFC provided a long-term loan of $70 million to the Vietnamese bank to support renewable energy business.

IFC also subscribed $95 million to international convertible bonds issued by HDBank to support increased lending to micro, small, and medium enterprises.

Currently, the total value of commitments and cooperation between IFC and HDBank has topped $200 million and will continuously increase and develop in the coming time.