Vietnam Prosperity Joint Stock Commercial Bank ( VPBank ) has marked a major milestone in its sustainability journey with the launch of its sustainability bond, the first such bond by a private bank in the nation.

The International Finance Corporation ( IFC ), a member of the World Bank Group and the world’s largest global development institution focused on the private sector, is investing US$200 million in the issuance. Together with Proparco, the French development finance institution, the IFC’s investment will channel international capital into Vietnam’s private sector, enabling more inclusive growth and supporting the country’s climate goals.

The five-year, US$300 million bond will finance projects that deliver both social and environmental benefits under Hanoi-headquartered VPBank’s newly established sustainable finance framework ( SFF ), the IFC announced in Hanoi on September 15.

Of the IFC’s investment, 60% is earmarked for loans to small and medium enterprises ( SMEs ), with half of that dedicated to women-owned businesses. The remaining 40% will support climate-friendly projects. Expanding VPBank’s SME loan portfolio alone is expected to generate up to 38,000 jobs in the next five years, creating new income opportunities across the nation.

SMEs, which account for one-third of Vietnam’s jobs, continue to face persistent financing gaps, even as the country requires substantial investment to transition to a low-carbon, high-income economy by 2045. Currently, climate finance, the IFC points out, represents just 4.5% of the banking sector’s total credit balance, underscoring the urgent need for innovative funding solutions.

The IFC’s role goes beyond investment. With support from the Australian government, the development institution has been providing advisory services to VPBank to assess green finance opportunities, strengthen its internal climate finance capacity and develop its SFF, a key tool for aligning green funding with international best practices.

Over the past five years, VPBank has mobilized about US$2 billion in sustainable finance for a wide range of green and social projects. The private bank is also a member of the Alliance for Green Commercial Banks, an IFC initiative that provides member banks with tailored training, peer-learning networks and technical exchanges to accelerate climate solutions.

“This issuance represents a major milestone in VPBank’s sustainable development journey and reaffirms Vietnam’s capacity to connect with global green capital flows,” notes Nguyen Duc Vinh, VPBank’s CEO. “Proceeds from the bond will be directed toward priority green and social projects, advancing the government’s net-zero commitment and fostering a prosperous, sustainable future for the country.”

Thomas Jacobs, the IFC’s country manager for Vietnam, Cambodia and Laos, adds: “This is a pioneering transaction for Vietnam’s banking sector and a model for other financial institutions in the country.”