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As part of International Finance Corporation’s (IFC) global trade finance program, this facility will improve VietinBank’s capacity to cover payment risk in granting trade financing to local companies, mostly small and medium enterprises.
“This trade line helps extend our capacity in delivering trade finance solutions to local importers and exporters,” said Nguyen Duc Thanh, VietinBank’s deputy chief executive officer. “As part of the program, VietinBank will be able to reaffirm its reputation globally and this will help increase our access to new markets.”
VietinBank is the country’s first state-owned commercial lender to join the trade finance program, which was introduced in Vietnam in 2007. Since then, more than 570 guarantees have been issued by participating banks to support $2.5 billion worth of trade finance, making Vietnam one of IFC’s top trade finance markets. In fiscal year 2013, from July 2012 to June 2013, alone, the program has committed a record $800 million to participating banks.
“By complementing banks’ capacity to deliver trade finance solutions, IFC has helped ensure continued trade flows vital to private sector growth despite liquidity constraints,” said Nathalie Louat, IFC’s senior manager of financial markets in East Asia and the Pacific. “This shows our commitment to strengthening and fostering the development of Vietnam’s financial markets.”
Since 2011, IFC has been holding an 8.03 per cent equity stake in the bank and provided a subordinated loan to support its partial privatization. Together with the latest trade finance facility, IFC has invested a total of $431 million in VietinBank, making it one of IFC’s biggest investments globally. IFC is also helping the bank expand its small and medium enterprise loan portfolio, strengthen its risk management, improve its corporate governance, and grow its energy-efficiency financing.