MICROCAPITAL BRIEF: Industrial and Commercial Bank of China (ICBC) Supports $100m IFC Loan to TienPhong Commercial Joint Stock Bank (TPBank) to Boost Digital Financial Services in Vietnam

With funds from the government-backed Industrial and Commercial Bank of China Limited (ICBC) and other sources, the World Bank Group’s International Finance Corporation (IFC) recently loaned USD 100 million to TienPhong Commercial Joint Stock Bank (TPBank) of Vietnam. TPBank plans to use the proceeds of the five-year loan to expand its lending via its website and mobile app. TPBank CEO Nguyen Hung reportedly said, “the much-needed syndicated funding from IFC and international lenders will help TPBank to implement a long-term digital strategy to capture the digital demographic growth opportunity and increase its reach to the unbanked and underserved segments.” While some of the funding will be on-lent to individuals, the bank has set a goal of doubling its micro-, small and medium-sized enterprise (MSME) loan portfolio by 2022.

The loan from IFC consists of USD 60 million from IFC’s own account; USD 22.5 million from the Managed Co-Lending Portfolio Program (MCPP), a debt fund managed by IFC on behalf of multiple institutional investors; and USD 17.5 million from ICBC. This last portion is being handled through IFC’s B Loan Program, under which IFC is the sole contractual lender to TPBank, although the funds are sourced from ICBC.

Established in 2008, TPBank is a technology-focused bank that provides insurance, deposit and lending services to individuals and enterprises. In August 2016, IFC bought a 5-percent equity stake in TPBank for VND 403 billion (USD 18 million). Financial data on TPBank are available in Vietnamese.

Founded in 1984, ICBC is known as one of China’s “Big Four” commercial banks and is majority-held by entities of the Chinese government. As of December 2017, ICBC reports that it holds total assets of CNY 26 trillion (USD 4 trillion) and serves 6.3 million companies and 567 million individual customers.

Established in 2013, MCPP is an IFC-managed investment vehicle through which institutional investors deploy debt capital primarily in the financial services and infrastructure sectors. As of 2018, the MCPP portfolio covers 60 countries and has received funding totaling USD 7 billion from the following investors: Allianz Global Investors, a unit of Germany-based Allianz Societas Europaea (SE); France-based AXA; Singapore-based Eastspring Investments; the Hong Kong Monetary Authority; Liberty Specialty Markets, a unit of US-based Liberty Mutual Insurance; Germany-based Munich Re; the People’s Bank of China; and Switzerland-based Swiss Re.

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. IFC has 184 member countries, and it reports total assets of USD 93 billion as of June 2017. During the year ending that month, it disbursed a total of USD 10 billion and achieved return on assets (ROA) of 1.6 percent and return on equity of (ROE) of 5.9 percent.

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2018, it has 189 member nations. The group encompasses (1) the International Bank for Reconstruction and Development and the International Development Association, which make up the World Bank; (2) IFC; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During 2017, the World Bank Group disbursed funds totaling USD 44 billion.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/A1429989015E8FC9852582C6000DEA23?OpenDocument

TPBank background
https://tpb.vn/eng/ve-tpbank

MCPP background
https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/products+and+services/syndications/mcpp

IFC B Loan Program
https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/products+and+services/syndications/b-loans

IFC press release, TPBank trade finance credit line
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/A182FEE7DB89E5C785257F1E0014ED87?OpenDocument

IFC press release, TPBank equity investment
https://ifcextapps.ifc.org/ifcext/pressroom/ifcpressroom.nsf/0/5B6C4D0AB6D0C0CF8525801E0007707D?OpenDocument

ICBC annual report
http://v.icbc.com.cn/userfiles/Resources/ICBCLTD/download/2018/720180423.pdf

MicroCapital Brief; June 22, 2018; IFC Loans $1.2m to AFK of Kosovo for Microlending to Smallholder Farmers; Micro-, Small Enterprises (MSEs)
https://www.microcapital.org/microcapital-brief-ifc-loans-1-2m-to-afk-of-kosovo-for-microlending-to-smallholder-farmers-micro-small-enterprises-mses/

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