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IFC Helps Vietnamese Banks Improve Sustainable Project Lending and Curb Risks

Hanoi, Vietnam, May 14, 2014 —IFC, a member of the World Bank Group, is helping Vietnamese banks better manage environmental and social risks in their lending operations to improve the sustainability of projects they finance locally and abroad and strengthen their portfolio performance.
Vietnam’s banks are well-placed to boost sustainable development through their financing of cross-border hydropower projects in the Mekong region. Vietnamese companies and banks are involved in about 20 hydropower projects in Lao PDR, accounting for up to 15 percent of the country’s hydropower potential if realized.
A banking workshop held today in Hanoi by IFC and the Institute of Manpower, Banking and Finance showed that, by ensuring large-scale infrastructure projects address environmental and social risks, banks can both encourage sustainable investments that yield benefits for people, the environment and investors while also reducing banks’ risk exposure.
“Investing in businesses that are commercially sound, provide people with incomes and other benefits, and treat the environment with care is strategically smart as it will support financial institutions’ business model,” said Simon Andrews, IFC Regional Manager for Vietnam, Cambodia, Lao PDR, Myanmar and Thailand. “If banks address environmental and social challenges of projects they finance, they will reduce their own risks and even open up new business opportunities, such as energy-efficiency and renewable-energy financing.”
More than 60 bank executives took part in the workshop designed to help Vietnam’s banks better identify, assess, manage and mitigate environmental and social risks in projects. They were introduced to tools including the Equator Principles, a set of voluntary guidelines helping banks to assess environmental and social sustainability in project financing. The Equator Principles have been adopted by 78 financial institutions worldwide and are based on IFC’s Performance Standards, which define clients’ roles and responsibilities in ensuring environmental and social sustainability in their projects.
“We hope that bank executives took away a clear understanding of what the risk is if environmental and social standards are not considered,” said Dao Chan Phuong, Chief Executive Officer, Institute of Manpower, Banking and Finance.
With IFC’s advice, the State Bank of Vietnam is developing regulations that promote sustainable banking. IFC is also helping banks throughout the region manage risks and address environmental responsibilities as part of its Environmental and Social Advisory Services in Lao PDR, an Australian aid project funded by the Australian Department of Foreign Affairs and Trade. Since 2011, IFC has been working with regional key players including the Thai Bankers’ Association to bolster risk management tools. IFC is also working with individual banks to help put in place environmental and social management systems.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in more than 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and promote shared prosperity. In FY13, our investments climbed to an all-time high of nearly $25 billion, leveraging the power of the private sector to create jobs and tackle the world’s most pressing development challenges. For more information, visit www.ifc.org .
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About The Institute of Manpower, Banking and Finance
The Institute of Manpower, Banking & Finance (BTCI) was established in 2001 by 10 leading shareholding banks in Vietnam as an initiative of IFC’s MPDF program. BTCI has a mission of supporting and enhancing the development of a new generation of bankers who work in accordance with international standards, code of conduct and global vision. During its 13 years of operation, BTCI has trained more than 50,000 Vietnamese bankers through more than 2,000 certified training programs. BTCI is the only institution in Vietnam to be accredited by the Netherlands Institute of Bank, Finance and Investment NIBE SVV. In 2011, BTCI was awarded the Certificate of Merit by the Governor of the State Bank of Vietnam. For more information, please visit www.btc.edu.vn .