20:39 (GMT +7) - Wednesday 17/01/2018

Banking & Finance

ABBank receives $150mn financing package from IFC

Released at: 21:41, 19/12/2017

ABBank receives $150mn financing package from IFC

Photo: ABBank

Loan for bank to expand lending to SMEs, in particular women-owned SMEs.

by Hong Nhung

The International Finance Corporation (IFC), a member of the World Bank Group, and Goldman Sachs’ 10,000 Women announced a syndicated senior loan of $110 million for the An Binh Commercial Joint Stock Bank (ABBank) to boost lending to small and medium-sized enterprises (SMEs).

This is the first phase of a $150-million financing package the IFC is arranging for the bank. At least one-third of the funding will support women-owned enterprises.

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

As Vietnam’s economic growth continues, long-term funding for SMEs will become critical. While SMEs account for more than 98 per cent of the country’s businesses and 50 per cent of employment, only 30 per cent of registered SMEs have access to formal financial services. Further, a new IFC study found 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 the 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 the segments,” said an ABBank representative. “The loan will also provide the bank with a more diversified source of long-term funding from international lenders.”

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

At least 30 per cent ($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 the IFC’s Banking on Women program and 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 up by an average of 12 per cent by 2030,” said Ms. 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 the right marketing,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos. “It will create 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.”

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