Hanoi-based VPBank has secured a US$350 million loan to support Vietnam’s green energy transition and sustainable development.

The loan, with a five-year maturity, was signed with Sumitomo Mitsui Banking Corporation ( SMBC ), the Japan International Cooperation Agency ( Jica ), and development finance institutions British International Investment ( BII ), Export Finance Australia ( EFA ), and Development Finance Institute Canada ( FinDev Canada ). SMBC acted as coordinator and mandated lead arranger.

The facility, equivalent to around 9.1 trillion dong, will serve as a significant funding source to support VPBank’s sustainable finance strategy focusing on three key pillars – social finance, green finance, and financing for essential infrastructure development.

“This successful funding from leading development finance institutions and bilateral agencies reaffirms VPBank’s financial strength, long-term strategic vision, and strong international reputation in sustainable finance,” says VPBank chief executive officer Nguyen Duc Vinh.

“The facility will allow our bank to expand its green and social lending portfolios while demonstrating a strong commitment to inclusive growth. It also supports Vietnamese enterprises, particularly women-led businesses, in their global expansion and helps improve the quality of life through essential infrastructure development.”

Climate-related projects

BII is contributing US$50 million to the facility, marking the UK development finance institution’s first direct debt investment in Vietnam.

Iain Frew, British ambassador to Vietnam, says: “Partnering with leading international and Vietnamese banks, this landmark finance facility will help to unlock critical green finance for local businesses in sectors like clean transport and renewable energy.”

“Supporting Vietnam’s net-zero ambition by 2050 is central to the UK and Vietnam’s strong partnership, and reflected in UK co-leadership of the Just Energy Transition Partnership to mobilize finance towards these goals,” he adds.

Vietnam is one of the world’s most vulnerable countries to climate change and one of the fastest-growing per-capita greenhouse gas emitters. Its energy sector, which has traditionally relied on fossil fuel, accounts for over half of the country’s total emissions, followed by agriculture, industrial processes, and waste.

To fully facilitate the green transition of these sectors, the World Bank estimates that US$368 billion will be required, underscoring the need to mobilize private capital to help the country achieve its climate targets.

Importance of partnerships

 The financing is also the first on-lending facility for Export Finance Australia in Southeast Asia’s financial institutions sector.

“This facility marks a significant step forward in our engagement with Vietnam and banking partners across Southeast Asia,” says John Hopkins, managing director and CEO of Export Finance Australia. “By working with VPBank and other international lenders, we are supporting the delivery of green and essential infrastructure across the region.”

Carsten Stoehr, executive officer, deputy head of Asia-Pacific division, SMBC, says: “This transaction demonstrates the importance of partnerships to create positive impacts on local communities and emerging markets.”

Paulo Martelli, vice president and chief investment officer of FinDev Canada, adds: “Our investment in support of Vietnam’s climate sector aligns perfectly with our Indo-Pacific investment strategy… By collaborating with committed partners, we aim to strengthen climate action, advance inclusive and sustainable development, and create lasting positive impact in Vietnam.”

The facility marks Jica’s second partnership with VPBank “to enhance financial access for women-owned micro, small, and medium enterprises under the SMBC-Jica Sustainable Finance Framework”, says Shigeo Honzu, senior deputy director general, private sector partnership and finance department, at Jica.