Welcome Financial and IFC Jointly Invest $60 Million in Vietnam NPL Market
400,000 Debtors Expected to Recover from Credit Crisis
Welcome Financial Group announced on the 27th that it has signed an agreement with the International Finance Corporation (IFC), a member of the World Bank Group, to jointly invest $60 million (KRW 83.226 billion) over three years in the non-performing loan (NPL) market in Vietnam.
The investment will be managed by Welcome Financial Group's Vietnamese subsidiary, Welcome Debt Trading, and will be fully used to purchase NPLs held by local financial institutions in Vietnam. Although NPLs have rapidly increased recently due to the spread of COVID-19 and the global economic downturn, the size of the NPL market has not kept pace, causing difficulties in NPL management.
This agreement is expected to resolve up to $1.2 billion worth of NPLs in the Vietnamese market. It is estimated that up to 400,000 debtors will be able to escape credit crises. The resolution of NPL issues is anticipated to foster the development of local banking and financial industries, creating an environment where investment and the economy in Vietnam, including the NPL market, can grow. Both parties have agreed to maintain continuous cooperation to advance the financial industry in Vietnam.
Welcome Financial Group entered the ASEAN (Association of Southeast Asian Nations) markets of five countries?Cambodia, Laos, Myanmar, and Vietnam?starting with its entry into the Philippines in 2014. In 2021, based on its experience in managing NPLs, it became the only Korean company to enter the Vietnamese NPL market. Welcome Debt Trading has purchased and is managing bonds worth approximately KRW 108 billion (20 trillion VND) from three local financial institutions.
Son Jong-joo, Chairman of Welcome Financial Group, stated, “Over the past two years, we have provided solutions to more than 16,000 customers in Vietnam to help them escape credit crises and return to normal financial life. Through this joint investment, we expect that the combination of Welcome Financial Group’s know-how and IFC’s global management capabilities will enable us to offer higher quality services to more customers.”
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Thomas Jacobs, IFC Mekong Regional Director responsible for Vietnam, Cambodia, and Laos, said, “Financial services and credit are key to emerging economies, and prolonged NPLs can hinder the recovery of borrowers’ credit and the growth of the financial industry. We believe that the cooperation between IFC and Welcome Financial Group will supply much-needed liquidity to the Vietnamese NPL market.” He added, “This joint investment is expected to enable financial institutions to resume lending while restoring the creditworthiness of individuals and small businesses. We anticipate that the financial industry will contribute to stabilizing Vietnam’s national economy and creating new jobs.”
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