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| Sacombank Long Term funding FY 07 |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 25731 |
| Company name | Saigon Thuong Tin Commercial Joint Stock Bank |
| Country | Vietnam |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | May 2, 2007 |
| Projected board date | June 1, 2007 |
| Previous Events | Invested: December 7, 2007
Signed: June 27, 2007
Approved: June 18, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The project involves a local currency, long-term financing package for up to $50 million equivalent to Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank or the Bank), a longstanding IFC client and a leading commercial bank in Vietnam. The funds will be used by Sacombank to support the growth of its housing finance lending operations. The tenor of the proposed funding is expected to be between 10-15 years, with a grace period of up to 2 years. The funds are expected to be provided by one or several local life insurance companies, backed by an IFC credit-linked guarantee, or directly by IFC. |
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| Project sponsor and major shareholders of project company |
Established in 1992 through a merger of four credit cooperatives, Sacombank is currently one of the largest joint-stock banks in Vietnam. It offers comprehensive commercial banking services, primarily to SMEs and individuals. The Bank has a diversified shareholding structure, with major shareholders including Refrigeration Electrical Engineering Corporation (5%), Dragon Financial Holdings (7.17%), ANZ (9.87%), IFC (7.3%), as well as some 15,000 individuals.
The Bank currently ranks first amongst local private banks in terms of capital ($160 million) and second in terms of total assets ($1.55 billion). It is also one of the most efficient and profitable banks in Vietnam, with the annualized ROAA of 2.08% and annualized ROE of 20.56% as of December 31, 2006. Sacombank was the first bank to be listed on the stock market in Vietnam. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment is a credit-linked guarantee, which will back a local-currency loan to Sacombank of up to $50 million equivalent from one or several local life insurance companies, with an expected tenor of between 10-15 years. Alternatively, IFC will provide funds to Sacombank directly. |
| Location of project and description of site |
| Sacombank is headquartered in Ho Chi Minh City and has a network of more than 160 branches nationwide. |
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| Anticipated development impact of the project |
The project is expected to have the following impacts:
- Expansion of Sacombank’s housing finance activities:
By providing long-term, local-currency funds to Sacombank, the project will help the Bank to expand its mortgage operations on a prudent basis, by allowing it to reduce the maturity mismatch between its assets and liabilities.
- Increasing access to housing finance:
In supporting the development of long-term mortgage lending, the project will increase the availability and affordability of housing finance for Vietnamese households.
- Development of new financial investments:
The project will provide an additional long-term investment option for life insurance companies and other institutional investors in Vietnam.
- Financial Innovation:
The project will be the first use of a credit-linked guarantee in Vietnam and could have a demonstration effect for further investments. |
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| IFC's expected development contribution |
| This project would pilot the use of credit-linked guarantee products in Vietnam. With this project, IFC is using its AAA rating and structured finance expertise to support a long-term, local-currency investment by a life insurance company in a local bank, for housing finance. In doing so, IFC is supporting the growth of the housing finance market, while also helping an institutional investor to develop an alternative long-term investment source. |
| Environmental and social issues - Category C |
| This project entails IFC support for retail housing/mortgages and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required. The project is required to inform IFC in the event of any change in nature or scope of its present business or operations. |
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| For inquiries about the project, contact: |
Phan Bich Van, CEO
Sacombank
278 Nam Ky Khoi Nghia, District 3,
Ho Chi Minh City, Vietnam
Telephone: (84-8) 9320 420
Website: http://www.sacombank.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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