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IFC’s First Financial Market and Equity Investment in Lao PDR Supports Development of Banking Sector


In Vientiane
Litsamy Latsavong

Telephone:  +856 21 450 017

Email:  
LLatsavong@ifc.org

In Hong Kong

Andrew Mak

Telephone:  +852 2509 8110

Email:  
AMak@ifc.org

In Phnom Penh

Ann Bishop

Telephone:  +855 23 210 922

Email:  
ABishop1@ifc.org


Vientiane,  May 02, 2007—IFC, the private sector arm of the World Bank Group, has made its first-ever financial market and equity investment in Lao PDR with the acquisition of 10 percent of the share capital of Vientiane Commercial Bank Limited, a leading private sector bank in the country. The $2.1 million investment will help the bank upgrade its governance, management, and commercial operations, thereby improving the provision of private sector banking services.

The banking sector in Lao PDR is primarily dominated by state-owned commercial banks, and services, particularly to small and medium enterprises, are severely limited.  It is estimated that only five percent of the population has a bank account. The project combines IFC’s financial products and advisory services to strengthen the country’s private sector banking system and support economic growth.


“This project will build our capacity to deliver and expand quality banking services to our clients, as well as contribute to the development of the Lao economy,” said Sop Sisomphou, Chairman of VCB. “We look forward to building a long-term relationship with IFC and drawing on its global knowledge and expertise.”


Working closely with Australia and New Zealand Banking Group Limited, which will acquire 60 percent of VCB, IFC will help the bank develop its products and services, particularly to its core customers in the retail and small and medium enterprise sectors. IFC Advisory Services for the Mekong region, the Mekong Private Sector Development Facility, will work closely with VCB to help build its capacity in trade finance, design of and training for a social and environmental management system, and training for credit assessment of micro and small business lending. The project will also help test the new Law on Commercial Banks, drafted with IFC’s support and launched in January 2007.  The law was designed to create a more favorable legal framework and a level playing field for private sector banks.


“This project will establish a complementary relationship among the local owners, Australia and New Zealand Banking Group, and IFC to help improve VCB’s products and services, thereby strengthening the banking sector in Lao PDR,” said IFC Country Manager, Sin Foong Wong. “We are pleased to be working with the country’s leading private sector bank on this pioneering project.”


"Access to finance is a key challenge for small businesses in Lao PDR.  Supporting VCB will help expand its private sector banking services and support economic growth,” said IFC Director for East Asia and Pacific, Richard Ranken. “IFC is delighted to be working with VCB and ANZ on this partnership, which supports our strategic priority of development in frontier markets.”


About IFC

IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries.  IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org.

About Vientiane Commercial Bank Limited

Established in 1993, VCB is the leading private sector commercial bank in the Lao PDR, operating in the capital, Vientiane. As of December 31, 2006, VCB had total assets of about $54 million and total equity of about $11 million. The bank provides trade-related financing, as well as corporate loans, primarily to SMEs, in a variety of sectors, including industry and handicraft, agriculture, construction, and services.