The Asian Infrastructure Investment Bank (AIIB) has approved a loan for Vietnam's Prosperity Joint Stock Commercial Bank (VP Bank) totalling $100m USD.
According to the AIIB, the loans aim to help the VP Bank increase lending and liquidity to private firms such as small and medium enterprises (SMEs) across Vietnam badly hit by COVID-19.
The $100m loan was approved on Thursday in a deal between VP Bank's head of foreign investment and transactional banking, Phuong Vo Hang and AIIB project team leader and principal investment officer, Pramod Vijayasankar.
— AIIB (@AIIB_Official) July 17, 2020
“This will be AIIB’s first financial intermediary financing in Southeast Asia that will target support for the private sector. Small and medium enterprises are the backbone of the economy and by injecting liquidity into the market we can help this critical sector as part of the overall economic recovery in Vietnam,” DJ Pandian, AIIB vice-president of investment operations said in a press statement.
Despite massive economic growth fuelled by a growing middle class over the last few decades, the country was disrupted by the ongoing pandemic and "suffered significantly", the Beijing-based bank said.
Vietnam's gross domestic product (GDP) shrank to 3.8 percent in the first quarter this year, with the International Monetary Fund estimating a fall to 2.7 percent, down from 7.0 percent last year, figures revealed.
The news comes after the AIIB launched a massive Sustainable Development Bond priced on the Chinese Interbank Bond Market (CIBM) valued at 3bn Yuan, or $424m USD).
The bond is backed by Chinese and foreign capital, expanding its size to $1.18bn, and will carry the 'Combatting COVID-19" label approved by the National Association of Financial Institutional Investors, the bank announced in June.
The AIIB also pledged $1mn USD and around 40 tonnes of supplies in February to assist global frontline healthcare professionals in Wuhan and Beijing to tackle the ongoing pandemic.