With VPBank, Proparco is supporting green projects and SMEs in Vietnam

VPBank (Vietnam Prosperity Joint Stock Company) is the country’s 10th largest bank in terms of assets and the 6th largest private bank, with a total balance sheet of USD 16.3bn at the end of 2019. 

USD 35m from the credit line is earmarked to support the bank’s SME lending activity, a business segment that VPBank is specialized in. USD 15m will support the development of its loan portfolio with climate co-benefits, in a country where the environmental risk is growing at a fast rate.

The operation will have a positive impact on access to bank loans for SMEs in a context where there is a lack of financing for SMEs in the country. According to the International Finance Corporation, some 17% of the country’s SMEs have unmet financing needs, creating a financing gap of USD 21.7bn, equivalent to 11% of the country’s GDP. Based on the average loan amount for SMEs, we estimate that Proparco’s financing could allow about 350 more SMEs to benefit from a loan. 

The project will also have positive impacts on increasing financing for the fight against climate change in Vietnam, where bank financing for the climate is still relatively low for a market where there are significant needs. In this respect, 30% of Proparco’s loan will be counted as climate-related, as the eligibility list of the Common Principles for Climate Mitigation/Adaptation Finance Tracking will be applied to our loan.