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25/06/2024
Hanoi, Viet Nam, June 25, 2024—To catalyze a viable blue finance market while fostering green bonds and supporting smaller businesses in Viet Nam, IFC is providing a financing package of $150 million to Southeast Asia Commercial Joint Stock Bank (SeABank, stock code: SSB). The investment entails the first blue bond in Viet Nam and the first green bond by a private commercial bank in the country.
As part of the financing package, IFC’s subscription in a blue bond of $25 million will allow SeABank to expand its funding for sustainable economic activities associated with ocean and water (aquaculture and fisheries, water supply, and others). IFC’s subscription in a green bond of $50 million will help the bank increase its financing of green assets, including green buildings, renewable energy, and energy efficiency. In addition, IFC, as the implementing entity of the UK’s Market Accelerator for Green Construction (MAGC) Program, will provide a performance-based incentive of up to $0.48 million for retail borrowers to help offset the incremental greening costs associated with the purchase of green housing units.
Additionally, IFC’s loan of $75 million to SeABank is aimed at boosting financing for small and medium enterprises (SMEs), including women-owned businesses, to promote financial inclusion.
One of the most vulnerable countries to climate change, the Vietnamese economy is already being impacted by an estimated loss equal to about 3.2 percent of GDP in 2020, which is expected to escalate rapidly. While millions of Vietnamese—with a 3,000-km coastline—rely on the ocean for a livelihood, the country’s blue economy is projected to contribute about 10 percent to the GDP by 2030.
To achieve net zero by 2050, Viet Nam needs additional investments of about 6.8 percent of GDP per year, or a cumulative $368 billion through 2040, half of which is expected to come from the private sector.
“IFC’s investment will help SeABank increase funding for initiatives that support the country’s climate and financial inclusion agenda. We are proud to be issuing the country’s first blue bond, as well as the first green bond by a private commercial bank, and we look forward to working with IFC to further bolster our green and blue portfolio strategy,” said Le Thu Thuy, Vice Chairwoman of SeABank Board of Directors.
Alongside the investment, IFC will advise SeABank on adopting green and blue bond frameworks, while helping the bank identify eligible green and blue assets and develop a pipeline.
“Viet Nam’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,” said Thomas Jacobs, IFC Country Manager for Viet Nam, Cambodia, and Lao PDR. “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 Viet Nam.”
IFC has been at the forefront of creating green and blue financing markets in Asia and the Pacific, supporting many financial institutions and companies to issue their first green and blue bonds in local markets. Last year, IFC invested VND 3,500 billion (around $150 million) in Viet Nam’s first local currency sustainability-linked bonds—issued by BIM Land Joint Stock Company and its subsidiary Thanh Xuan Joint Stock Company. With this new investment in SeABank, IFC has committed to date about $1 billion in long-term finance to support climate-related projects in the country.
IFC has partnered with SeABank since 2021, helping the bank expand lending to SMEs, increase access to climate finance, and boost international trade opportunities. IFC has advised the bank to develop its strategy to increase lending to women-owned SMEs with tailored financial products. IFC has also assisted the lender to put in place an integrated environmental, social, and governance (ESG) framework to enhance the bank’s capacity to assess and manage E&S risks. With IFC’s support, SeABank has prioritized its funding for green projects to promote climate change mitigation and resource efficiency.
