CASE STUDY

Viet Nam’s Oldest Bank BIDV Issues Inaugural Green
Bond in the Domestic Market
The World Bank provided technicalassistance to Viet Nam’s BIDV (Joint Stock
Commercial Bank for Investment andDevelopment of Viet Nam) to issue its
inaugural, USD equivalent 104 million,green bond. This transaction marks manyfirsts in the domestic market: it is the firstsenior, unsecured and unguaranteed 1
green bond issued by a local commercialbank in Viet Nam.

BackgroundIn 2021, at the United Nations Climate Change
Summit (COP26), Viet Nam announced its
commitment to achieving “Net Zero” emissions by
2050. The country supported this ambition byapproving a National Green Growth Strategy forthe period 2021-2030, updating its Nationally
Determined Contributions (NDC), and approving aplan on tasks and solutions to respond to climatechange and energy transition. To contribute to theimplementation of the strategy and commitmentsof the Government of Viet Nam, the central bank
(State Bank of Viet Nam) set out an action plan forthe banking sector to implement the National
Green Growth Strategy and the outcomes ofCOP26. Against this backdrop, BIDV intensified itsefforts to promote green growth within thecountry’s economy.
As the oldest financial institution in Viet Nam andone of the top three hundred largest banks in theworld, BIDV is committed to contributing to finding
solutions to current challenges facing the planetand society. It is focusing on tailoring green
financial products and services as well as adjusting
its structure and organizational model towards
green banking, which is defined as a priority goalin its business strategy for the period of 2021 2025 and vision to 2030. In 2022, its green
financing reached more than VND 63,773 billion
1 Senior: Senior green bonds have priority over other debts in asset

distribution during bankruptcy.
Unsecured: These green bonds lack collateral, meaning they are not backed
by specific assets.

Photo Credit: Yen River with Rowing Boat Harvesting Waterlily in Ninh Binh,
Vietnam by Vinh Dao - Canva(equivalent to USD 2.7 billion) with 1,368 projects,
accounting for 4.3 percent of BIDV's total
outstanding loans and 13 percent of the total
outstanding loans to the green sector of the wholeeconomy.
Early in 2023, BIDV issued a Sustainable Loan
Framework aligned with international standards,creating
thefoundationforintroducing
sustainable financial products to Viet Nam’sbanking sector. 2 Determined to join thegovernment in implementing the commitment toachieve net zero emissions by 2050, BIDV thenfocused on raising capital to fund activities thatgenerate
positiveenvironmentalimpact,especially climate.

Financial Solution
A green bond is a fixed income instrument where
the proceeds are earmarked for projects aimed atgenerating positive environmental impact. They
are well established and well understood by themainstream financial markets and help investors
drive capital towards projects that are in line with
their environmental, social and governancepriorities. Labeled green bonds have to conform tothe International Capital Market Association Green
Bond Principles if they are to attract investors who
Unguaranteed: Green bonds without external guarantees rely solely on theissuer's creditworthiness2 Press release – 16 February 2023 - First Vietnamese bank to issue
Sustainable Loan Framework link

CASE STUDY
are interested in sustainable investments. This
involves developing a green bond framework thatsets out how the issuer intends to issue green
bonds to fund projects that are consistent with its
vision to improve the environment, combat
climate change and transition to a low carbon
economy.
In its Green Bond Framework, BIDV has
highlighted 13 categories of projects which would
be eligible for financing with green
bondproceeds, including – renewable energy, clean
energy, green industry, environmental protectionand energy saving services provision, sustainabletransport, green construction, green agriculture,sustainable
forestry,sustainablewater
management in urban and rural areas, waste
treatment and pollution prevention, naturalenvironment protection, ecological environment
restoration and natural disasters prevention,
recycled and renewable resources. In theFramework, BIDV provides details on how bondproceeds will be deposited in general accounts
and earmarked for eligible projects. They retainsome flexibility to finance existing projects,
allowing for a lookback period of 36 months
before the date of issuance. All bond proceeds willbe allocated within 24 months of the issuance of agreen bond. BIDV committed to reporting on theallocation and impact of proceeds through annual
reports published on its website until proceeds arefully allocated. The Framework was reviewed byMoody’s, received a score of SQS2 (Very Good, thesecond highest sustainability score in Moody’s
methodology).

domestic market, the first green bond that has
been ESG-rated in Viet Nam. It was also the firstsenior, unsecured and unguaranteed green bondin Viet Nam.

World Bank’s Role
BIDV’s green bond was the result of a multiinstitution, multi-team collaborative effort at theWorld Bank Group. The World Bank Treasury’sSustainable Finance and ESG Advisory Services incollaboration with Finance, Competitiveness andInnovation (FCI) and the International FinanceCorporation (IFC) provided technical assistance toBIDV under the Joint Capital Market Development
Program (J-CAP). 3 The technical assistanceincluded helping BIDV understand international
best practices and develop a roadmap and action
plan, reviewing BIDV’s green bond framework, andassisting with the independent external review(Second-Party Opinion) by Moody’s. Going forward
the World Bank will build BIDV’s capacity toprepare the post issuance allocation and impactreport.

Summary of Financial Terms
Date of issuance

October 25, 2023

AmountVND 2,500 billion (in localcurrency); USD 104 million
equivalentTenor

5 years

Use of proceeds

In line with Green Bond
Framework: green, energy
saving, emission reduction, andenvironmental protection
projects

Outcome
BIDV’s first green bond was issued on October 25,2023, in the local market. The bond issuancehighlighted many firsts. It became the first bank inViet Nam to successfully issue a green bond in theContact: Miguel Navarro-Martin, Manager, Financial Products & Client Solutions, The World Bank Treasury
 mnavarromartin@worldbank.org  +1 (202) 458 4722
1225 Connecticut Avenue NW, Washington, D.C., 20433, U.S.A.

3 Globally, the J-CAP initiative is made possible by the support of thegovernments of Australia, Germany, Japan, Luxembourg, the Netherlands,
Norway, and Switzerland. In Vietnam, J-CAP is funded by the Swiss Secretariat

for Economic Affairs (SECO) and Australia’s Department of Foreign Affairs andTrade (DFAT).