KUALA LUMPUR: CIMB Bank Bhd has entered into a sustainability-linked derivative (SLD) transaction with Standard Chartered Malaysia in the form of an interest rate swap with a notional value of RM2.45 billion for hedging purposes.
Based on publicly available data and the latest data compiled by the International Swaps and Derivatives Association (ISDA) as at January 2021, this landmark deal is the world’s first ringgit-denominated SLD transaction and to date Asia’s largest environmental, social and governance (ESG) linked derivative transaction by notional value.
Following the transaction, CIMB said it was keen to work with clients to execute more innovative treasury and derivative transactions with ESG-related pricing components or utilisation of proceeds such as swaps, forwards and options involving cross currency, interest rate, commodity, or foreign exchange transactions.
CIMB has also been active in offering loan and financing products and bonds and sukuk that are sustainable or sustainability-linked.
Group chief executive officer (CEO) Datuk Abdul Rahman Ahmad said the transaction was a testament to the expertise of the bank’s treasury and markets team and its ambition to be an Asean sustainability leader by 2024.
“This transaction demonstrates our very real commitment towards achieving our commitments to mobilise RM30 billion in sustainable finance by 2024, achieve net zero scope 1 and 2 GHG emissions by 2030, and Net Zero GHG emissions by 2050, including financed emissions.
“As a financial intermediary, we play a critical role in channelling financing and capital in ways that will support a just transition towards a net zero economy and greater social equity. In collaboration with our clients and partners, we look forward to introducing more innovative offerings such as this SLD in the sustainable finance space,” he said in a statement today.
Standard Chartered Malaysia managing director and CEO Abrar A. Anwar said the attitude towards ESG issues had transformed significantly but many companies were still facing challenges when it comes to incorporating sustainability.
“Despite their intention to transition to net zero by 2050, 67 per cent of corporates have yet to take any action due to the lack of capital.
“As a key intermediary in the financial system, Standard Chartered is making big strides in the roll- out of new ESG products within our derivatives offering in Asia such as commodity, forex and credit – a proposition that is unique to us and offered globally.
“It isn’t just about helping clients. We’re looking inwards and making our own commitments.
“To that effect, Standard Chartered is working towards reaching net zero carbon emissions from our financing by 2050, as part of our strategic commitment to put the world on a sustainable path to a zero-carbon economy,” he said.
CIMB said the SLD offering extended the bank’s track record as an early mover in sustainability-linked instruments in the Asean region.
CIMB has been actively providing sustainable lending and financing products and was one of the first banks in the country to launch sustainability-linked loans for corporate clients in 2020 with an allocation of RM3 billion through 2024.
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