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Green Finance / ESG Investing / Treasury & Capital Markets
IFC, Norfund invest US$180 million in Vietnam’s SeABank
Blue and green bonds offer new source of funding for climate-related projects
Sao Da Jr 26 Jun 2024

World Bank Group’s private investment arm IFC and the Norwegian Investment Fund for Developing Countries (Norfund) are investing a combined US$180 million in Hanoi-based Southeast Asia Commercial Joint Stock Bank (SeABank) to expand its business.

IFC is providing a financing package of US$150 million to SeABank by investing in Vietnam’s first blue bond and the country’s first green bond by a private commercial bank.

IFC’s subscription for a blue bond of US$25 million will allow the Vietnamese bank to expand its funding for sustainable economic activities associated with ocean and water, such as aquaculture, fisheries, and water supply.

Its subscription for a green bond of US$50 million will help the lender increase its financing of green assets, including green buildings, renewable energy, and energy efficiency.

As the implementing entity of the United Kingdom’s Market Accelerator for Green Construction (MAGC) Programme, IFC will also provide a performance-based incentive of up to US$0.48 million for retail borrowers to help offset the incremental greening costs associated with the purchase of green housing units.

Additionally, IFC is lending US$75 million to SeABank to boost financing for small and medium enterprises, including women-owned businesses, to promote financial inclusion.

Climate impact

Vietnam is one of the most vulnerable countries to climate change, whose impact is estimated to have resulted in a loss equal to about 3.2% of its GDP in 2020 and is expected to escalate rapidly.

At the same time, millions of Vietnamese rely on the ocean for livelihood. The country, with a 3,000-kilometre coastline, has a vibrant blue economy which is projected to contribute about 10% to the GDP by 2030.

"Vietnam's green transition relies heavily on private capital, and the launch of innovative financing instruments such as blue and green bonds offers a new source of funding for climate-related projects," says Thomas Jacobs, IFC country manager for Vietnam, Cambodia, and Laos.

"With this investment in a leading player, IFC is establishing new asset classes while mobilizing capital and strengthening the capacity of local financial institutions to drive increased climate finance in Vietnam," Jacobs adds.

Le Thu Thuy, vice chair of SeABank’s board of directors, says: “IFC's investment will help SeABank increase funding for initiatives that support the country's climate and financial inclusion agenda. We look forward to working with IFC to further bolster our green and blue portfolio strategy.”

Since 2021, IFC has been helping SeABank expand lending to firms, increase access to climate finance, and boost international trade opportunities.

To achieve its target of net zero by 2050, Vietnam needs additional investments of about 6.8% of GDP per year, or a cumulative US$368 billion through to 2040, half of which is expected to come from the private sector, IFC says.

The World Bank unit is advising SeABank on the adoption of green and blue bond frameworks, while helping the lender identify eligible green and blue assets to develop a pipeline.

Convertible loan

Just prior to IFC’s latest US$150 million investment, SeABank secured a convertible loan worth US$30 million from Norfund. The loan can be converted into SeABank's common shares within four years.

The investment aims to support micro, small and medium-sized enterprises (MSMEs) and individual customers in Vietnam.

Owned and funded by the Norwegian government, Norfund aims to strengthen businesses that create jobs and reduce poverty in developing countries.

Established in 1994, SeABank is one of the leading joint stock commercial banks in Vietnam with more than three million customers, nearly 5,500 employees and more than 180 transaction points across the country.

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