IFC funds push Vietnam banking sector reform

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The International Finance Corporation (IFC), a member of the World Bank Group, said Monday that it has invested US$40.5 million in long-term capital in An Binh Bank, one of the Vietnam's 15 largest joint stock banks by assets.

An IFC press release said the investment will help strengthen the country's banking sector and improve access to finance for small and midsize enterprises.

It said the investment package includes the purchase of a convertible bond worth VND480 billion and a straight bond worth VND312 billion.

"IFC's investment in the current unfavorable market conditions provides much needed long-term capital for An Binh Bank to grow its portfolio and implement a capital increase plan in 2013," the release cited Vu Van Tien, An Binh Bank's chairman as saying.

Under an advisory services agreement signed in June 2010, IFC will help design and implement a strategy to develop An Binh Bank into a specialized bank servicing small and midsize enterprises.

On Tuesday, IFC announced that it will invest approximately $182 million in equity and offer $125

million in subordinated debt in the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), one of the country's largest state-owned commercial banks.

The investment will be made together with IFC Capitalization Fund, a global equity and subordinated debt fund founded by IFC and the Japan Bank for International Cooperation.

The money will help support the partial privatization of Vietnam's banking sector and improve access to finance for small and midsize enterprises, according to the agreements signed in Hanoi on Tuesday.

Through these agreements, VietinBank has become the first state-owned Vietnamese bank to allow a strategic foreign investor to take an ownership stake.

Last October, IFC and VietinBank also signed an advisory agreement that will help the bank expand its small and midsize enterprise loan portfolio.

VietinBank, Vietnam's second-largest bank by market value, expects to sell a 15 percent stake itself to Canada's Bank of Nova Scotia in the third quarter, chairman Pham Huy Hung was quoted by Bloomberg as saying on Tuesday.

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