IFC joins ABBank to support lending to small businesses and women-owned SMEs

This is the first phase of an up to $150-million financing package IFC is arranging for An Binh Bank (ABBank). At least one third of the funding will go to support women-owned enterprises.

With this funding, the bank 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 per cent of the country’s businesses and 50 per cent of employment, only 30 per cent of the registered SMEs have 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.”

The signing ceremony of the syndicated loan between IFC and ABBank

“This project will promote women-owned SMEs as a viable business opportunity by providing 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 market segment. Subsequently, it will support the growth of women-owned SMEs, which will in turn create jobs and drive wage growth.”

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 per cent ($45 million) of the funding will be exclusively earmarked for women-owned SMEs, thanks to 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.

WEOF was launched in 2014 as a partnership between IFC’s Banking on Women programme and the Goldman Sachs 10,000 Women initiative to radically expand access to financing 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 per cent higher by 2030,” said Charlotte Keenan, head of Goldman Sachs 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.”

IFC provided ABBank with a trade line under its Global Trade Finance Programme in 2009 before it became the bank’s foreign investor with 10 per cent 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.

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