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RHB completes Malaysia’s first ESG-linked cross currency interest rate swap

KUALA LUMPUR: RHB Banking Group has successfully structured Malaysia’s first Green Cross Currency Interest Rate Swap transaction set against environmental, social and governance (ESG) linked key performance indicators (KPIs) to hedge a US$100mil 2-year sustainable loan.

RHB, in a statement, said the landmark Green Cross Currency Interest Rate Swap transaction further solidified its commitment towards enhancing the growth of the rapidly evolving ESG landscape within the Malaysian banking sector.

“KPIs for the Green Cross Currency Interest Rate Swap is linked to RHB’s Green Financing Commitment of RM5bil in support of green financing by 2025, which entails the group’s core business activities of lending, capital markets and advisory as well as investment,” it said.

Group managing director and CEO Datuk Khairussaleh Ramli said the structuring and successful execution of Malaysia’s first Green Cross Currency Interest Rate Swap transaction drive sustainable value creation for its stakeholders and underline RHB’s position as a leader within the ESG derivatives market.

“With the growth in sustainable investing, we are also seeing increasing demands for derivative products, specifically linked to ESG KPIs and where returns are linked to sustainability performance and targets.

“This first in market transaction marks the beginning of our journey in developing customisable sustainability linked derivative transactions using measurable KPIs.

“This will promote climate action and the adoption of sustainable practices leading to the realisation of actual impact and change in the real economy,” he said.

RHB said the completion of the Green Cross Currency Interest Rate Swap, executed with Standard Chartered Bank, exemplified its commitment to support the growth of the green economy by encouraging its stakeholders, including customers and business partners, to adopt more sustainable business practices.

“A total of RM3.79bil has been extended to green activities by the group, of which 19% is attributed to renewable energy projects as at September 2021,” it added.

The bank is committed to supporting Malaysia’s aspiration to transition to a low-carbon and climate-resilient economy and had previously announced its target of RM5bil in support of green financing by 2025 through lending, capital markets advisory and fundraising, as well as investments.

Reference