IFC supports Vietnam Prosperity Bank to boost climate financing, reduce greenhouse gas emissions

14 January 2020

IFC supports Vietnam Prosperity Bank to boost climate financing, reduce greenhouse gas emissions

IFC, a member of the World Bank Group, is providing a financing package of $212.5 million to Vietnam Prosperity Joint Stock Commercial Bank. The funding will help VPBank expand its lending to small and medium enterprises (SMEs) and boost financing, especially for climate-friendly projects.

Concerning greenhouse-gas emissions, Vietnam’s is one of the most carbon-intensive countries in the world, ranking only after China and Mongolia in the East Asia and Pacific region. While reducing greenhouse-gas emissions has been a national target to mitigate climate change impact, it presents a $753 billion climate investment opportunity for Vietnam between 2016 and 2030, according to an IFC study.

However, the current share of climate financing — as a percentage of total bank financing — in Vietnam is just about five percent or $10.3 billion, indicating a significant climate finance gap. Against this backdrop, about one-third of the financing package will be earmarked for climate-friendly projects, creating new options for businesses to obtain green financing at a favorable interest rate.

“Our loan to VPBank addresses IFC´s strategic objective of increasing financing for climate-smart initiatives to boost environmentally sustainable development in emerging markets with high potential of greenhouse gas emissions reduction such as Vietnam,” said Rosy Khanna, IFC Financial Institutions Group Director for Asia Pacific. 

This is IFC’s first green loan to a bank in Vietnam, where most of the near-term multimillion-dollar climate investment potential is in renewables and infrastructure.

Original source: IFC
Published on 14 January 2019