BUSINESS

CIMB ENTERS INTO RM2.45 BLN SUSTAINABILITY-LINKED DERIVATIVE TRANSACTION WITH STANDARD CHARTERED

20/10/2021 11:21 AM

KUALA LUMPUR, Oct 20 -- CIMB Bank 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.

In a statement, CIMB said based on publicly available data and the latest data compiled by the International Swaps and Derivatives Association (ISDA) as at January 2021, the deal is the world’s first Malaysian ringgit denominated SLD transaction and to date Asia’s largest environmental, social and governance (ESG) linked derivative transaction by notional value.

“We are pleased to have successfully executed this landmark SLD transaction, a testament to the expertise of our Treasury & Markets team and our Group’s ambition to be an ASEAN sustainability leader by 2024,” CIMB group chief executive officer (CEO) Datuk Abdul Rahman Ahmad said.

This transaction demonstrates the bank’s commitment towards achieving its 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.

This SLD transaction has been structured to involve a pricing mechanism whereby a discount (cost reduction) or premium (penalty) will be applied depending on whether CIMB Group achieves pre-agreed sustainability performance targets (SPTs).

Following this transaction, CIMB is 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/financing products and bonds/sukuk that are sustainable or sustainability-linked, it said.

Standard Chartered Malaysia managing director and CEO Abrar A.Anwar said the attitude towards ESG issues has transformed significantly but many companies are 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 rollout 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,” he said.

This SLD offering extends CIMB’s track record as an early mover in sustainability-linked instruments in the ASEAN region. CIMB has been actively providing sustainable lending/financing products and was one of the first banks in the country to launch sustainability-linked loans (SLLs) for corporate clients in 2020 with an allocation of RM3 billion through 2024.

As for the bonds/sukuk space, in the first half of 2021, CIMB acted as the lead manager for the government of Malaysia’s dual tranche US$1.3 billion Sukuk Wakala offering, where the US$800 million sustainability tranche was the world’s first US dollar sustainability sukuk offered by a sovereign.

CIMB also launched and priced the government of Indonesia’s US$3 billion global sukuk offering, including a US$750 million green sukuk tranche.

-- BERNAMA


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