Thursday, Jul 7, 2022
International Finance

IFC arranges $150 million financing package for ABBANK to expand lending to SMEs

With this funding, ABBANK aims to triple its SME portfolio and quadruple the size of its lending to women-owned SMEs over a five-year period

IFC, a member of the World Bank Group, and Goldman Sachs 10,000 Women announced a syndicated senior loan of $110 million to An Binh Commercial Joint Stock Bank (ABBANK) to boost lending to small and medium enterprises (SMEs). This is the first phase of a up to $150 million financing package IFC is arranging for the bank. At least one third of the funding will support women-owned enterprises.

With this funding, ABBANK aims to triple its SME portfolio and quadruple the size of its lending to women-owned SMEs over a five-year period. The outstanding SME portfolio is expected to reach more than $1 billion by 2021.

As Vietnam’s economic growth continues, long-term funding for SMEs is going to become critical. While SMEs account for more than 98 percent of the country’s businesses and 50 percent of employment, only 30 percent of the registered SMEs has access to formal financial services. Further, a new IFC study finds that it is even more difficult for women-owned SMEs to obtain bank loans, with an estimated credit gap of $1.2 billion per annum.

“The much-needed syndicated funding from IFC and partner banks will help strengthen ABBANK’s SME and women-owned SME portfolios, thus positioning the bank to become one of the leaders in this segment,” said an ABBANK representative. “In addition, this loan will provide the bank with a more diversified source of long-term funding from international lenders.”

Of this $150 million financing package, IFC is contributing $40 million from its own account, while $70 million comes from Industrial and Commercial Bank of China Limited (ICBC), Bangkok Bank Public Company Limited and Maybank International Ltd. The remaining $40 million will be committed by two other international lenders within this month.

Specifically, at least 30 percent, $45 million, of the funding will be exclusively earmarked for women-owned SMEs, thanks to the Women Entrepreneurs Opportunity Facility (WEOF), a global facility dedicated to expanding access to capital for women entrepreneurs, aiming to help close the estimated $285 billion credit gap for women-owned businesses around the world. The WEOF was launched in 2014 as a partnership between IFC’s Banking on Women program and the Goldman Sachs 10,000 Women initiative to radically expand access to finance for women-owned businesses. Since then, it has made almost $900 million in commitments to financial institutions in 15 countries to spur lending to women entrepreneurs.

“Goldman Sachs research shows that closing the credit gap for women-owned SMEs in emerging markets could push income per capita an average of 12 percent higher by 2030,” said Charlotte Keenan, Head of 10,000 Women. “Women entrepreneurs have real potential to impact Vietnam’s future growth as a result of this commitment. Through this partnership, we will help to build resilient, women-owned businesses and enable women entrepreneurs to reach their full potential with the capital and support they need.”

“This project will promote women-owned SMEs as a viable business opportunity when provided with tailored products, appropriate offerings, and right marketing,” said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Lao PDR. “It will create a momentum for other lenders in Vietnam to expand their product offerings in this segment of the market. Subsequently, it will support the growth of women-owned SMEs, which will in turn create jobs and drive wage growth.”

IFC provided ABBANK with a trade line under its Global Trade Finance Program in 2009 before it became the bank’s foreign investor with 10 percent equity stake in 2013. Along with financing, IFC has helped ABBANK strengthen its corporate governance and build up its SME banking capacity over the past five years. Going forward, IFC will continue advising the bank on segmenting, developing and strengthening its value proposition for women entrepreneurs.

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.