Loans

VPBank scores with largest loan

 | Updated:  |  IFR 2590 - 5 Jul 2025 - 11 Jul 2025  | 

Vietnam Prosperity Joint Stock Commercial Bank (VPBank) has closed its latest financing tied to ESG metrics at US$1.56bn, following a blowout response from nearly three dozen lenders in what is the country’s most widely syndicated loan for a bank borrower.

The final size makes it the largest ESG loan from Asia Pacific for a bank borrower and the largest syndicated loan for a financial institution from Vietnam, according to LPC data. At the launch size of US$1bn, the offshore borrowing was already the largest such loan for a Vietnamese bank since 2022 after government investigations into fraud in the financial sector made investors wary of exposure to the country.

The hugely successful outcome has underscored VPBank’s robust credit profile underpinned by its financials, its parentage and Vietnam’s banking reforms announced earlier in the year.

“We are keen to lend as VPBank is one of Vietnam’s leading private commercial banks with solid asset quality and strong profitability,” said a Hong Kong-based senior banker.

VPBank posted a pre-tax profit of nearly D18.3trn (US$730m) in 2024, a 35.6% increase from 2023. Its loan-to-deposit ratio of 143% as of December was the highest among its rated peers.

Additionally, SMBC’s 15% equity stake in VPBank, acquired in 2023, played a crucial role in bolstering the borrower’s credibility among international lenders.

“The Japanese banking giant’s involvement as a shareholder and coordinator of the financing provided additional reassurance to us,” said the Hong Kong-based banker. “We also have confidence in Vietnam’s banking sector, which has been bolstered by banking reforms and the country’s resilient economic growth.”

In March, the government raised the foreign ownership cap for select private banks from 30% to 49% as part of broader banking sector reforms, with a view to attracting international investment and enhancing the financial system’s competitiveness.

VPBank’s loan was closed despite uncertainty over Vietnam's economic prospects after the US hit the country with a 46% "reciprocal" tariff on April 2, subsequently paused at 10% for 90 days. On July 2, US president Donald Trump said the two countries had concluded a trade deal that will impose a 20% tariff on Vietnam's goods (and 40% on trans-shipments from other countries). 

Still, lenders believe the impact of the tariffs on the banking sector will be less pronounced than on manufacturing.

“VPBank’s core business in retail banking and consumer finance means it is less impacted by direct trade issues,” said a Singapore-based senior banker. “In addition, Vietnam’s expanding middle class and increasing domestic consumption have provided a strong foundation for its retail operations.”

Good timing

The timing of VPBank’s visit to the offshore loan market also helped as its deal faced hardly any competition. 

Vietnam’s offshore loan volumes have fluctuated significantly in recent years. In 2021, offshore borrowings peaked at US$7.08bn but dropped sharply by 31% in 2022 to US$4.87bn and fell a further 18% in 2023 to US$4bn. A rebound followed in 2024, with a 24% increase to US$4.97bn, while the 2025 year-to-date volume stands at US$2.1bn, according to LPC data.

Since the beginning of 2024, only a handful of Vietnamese banks have borrowed in the offshore loan market, including VPBank’s subsidiary, VPBank Securities, and Saigon Hanoi Commercial Joint Stock Bank that wrapped up deals earlier this year.

In April, Saigon Hanoi Bank closed a US$250m three-year ESG loan after attracting 15 banks in general syndication, while VPBank Securities increased a 364-day debut financing to US$125m from US$75m after drawing nine banks in general syndication.

In the first half of this year, loan volumes from Vietnam totalled US$2.1bn, a 38.1% drop versus the US$3.39bn raised in the same period in 2024, according to LPC data.

Market participants believe that while ample liquidity is available for Vietnam’s top private sector banks, credit quality and pricing must align for deals to materialise.

“We do not anticipate other significant transactions from top-tier borrowers like VPBank tapping the offshore market very soon, primarily due to pricing challenges, while smaller or medium-sized borrowers may face challenges in accessing offshore funding due to stricter covenants and higher collateral requirements,” said another Singapore-based banker.

VPBank’s US$1.56bn loan paid competitive pricing – top-level all-in pricing was 185bp via an interest margin of 157bp over term SOFR – enhancing its appeal for participating lenders. Saigon Hanoi Bank’s loan paid a top-level all-in of 212.5bp via a margin of 200bp over term SOFR. The top-level all-in for the loan for VPBank Securities was 260p via a margin of 205bp over term SOFR.

Onshore reliance

Most Vietnamese companies continue to rely on onshore dong-denominated financing because of rising US dollar funding costs, aligning with Vietnam's broader de-dollarisation strategy to reduce reliance on foreign currencies and stabilise the financial system.

“Vietnamese dong funding costs for local borrowers are typically below 4%, making it much cheaper than offshore US dollar loans,” said a Vietnam-based senior banker. “Moreover, strict government controls on foreign borrowing, including obtaining approval from the State Bank of Vietnam, add complexity to dollar-denominated deals.”

He said that onshore dong loans also eliminate foreign exchange risks for businesses with a domestic focus.

Bankers said borrowers such as VPBank can raise onshore dong loans at levels at least 100bp to 200bp cheaper than offshore loans.

In June, BIDV-Sumi Trust Leasing raised a D1trn (US$40m) 364-day loan from five Taiwanese banks. The financing pays a margin of 150bp over Vnibor. 

Bitexco Workplace, a subsidiary of Vietnamese conglomerate Bitexco Group, is eyeing a dong loan to refinance a US$225m five-year amortising facility completed in late 2020. The dollar borrowing had paid a top-level all-in of 414.6bp based on a margin of 395bp over Libor and a 4.6-year average life.

“Banks may have dollar lending so it makes sense to borrow in dollars, and it is not as prohibitive as for some corporates because they can manage their treasuries better. For corporates, especially real estate where all the business is local currency, we are seeing requests for local currency financing and that will continue,” said a third Singapore-based banker.