The agreement aimed at enhancing the ability of VPBank to provide short and long-term financing to the country’s small businesses contains an option that entitles IFC to elect to convert the debt into stockholder equity.

The loan is for an initial period of two years, IFC said in a statement, with the ability of VPBank to request one additional 2-year extension.

Nguyen Duc Vinh, CEO of VPBank, said on Tuesday (July 18) that if IFC exercises its right to convert the loan to common shares that would be a boon to the bank, strengthening its capital adequacy ratio (CAR).

In 2016 and early 2017, Mr. Vinh noted, IFC also supported VPBank with a 5-year financial package worth US$158 million and trade guarantee lines of up to US$50 million.

That deal facilitated VPBank to expand its lending capacity to small businesses, especially those led by women, and helped them boost international trade opportunities.

IFC has been actively investing in the finance sector in Vietnam.

In addition to VPBank, it earlier invested US$18.35 million in TPBank in exchange for 5% of the outstanding common shares among other deals with the State Capital Investment Corporation and Dragon Capital.