KUALA LUMPUR: RHB Bank Bhd and OCBC Bank (Malaysia) Bhd have sealed an agreement over sustainability-linked solutions which boost the latter's sustainable financing portfolio that stood at $44 billion as at end-2022.
The two sustainability solutions consisted of a two-year S$150 million sustainability-linked loan and cross currency swap.
The other solution is a S$100 million sustainability-linked loan to RHB Bank Singapore.
The solutions signifies RHB Banking Group's commitment to integrating sustainability as part of the business and operations.
It also helps the bank to lead by example by nurturing its clients in adopting sustainable financial services.
"Both transactions were structured in a way that promotes and drives impactful sustainable business practices as they allow RHB Banking Group to enjoy better rates if it meets the agreed Sustainability Performance targets in two key metrics," RHB said in a joint statement.
The cross currency swap will be used to hedge the currency risk coming on the back of the underlying S$150 million sustainability-linked loan with RHB Malaysia.
This is OCBC Bank's first sustainability-linked derivative (SLD) transaction with a Malaysian financial institution.
Meanwhile, it is the second SLD transaction for RHB after its successful structuring of Malaysia's first green cross currency swap in 2021.
"This facility will allow RHB Malaysia to convert its Singapore dollar-denominated proceeds to US.dollar at a competitive rate and at the same time, hedge USD/SGD currency exposure for the duration of the swap," it added.
RHB group treasurer Angus Salim Amran said the bank was pleased with the collaboration with OCBC Bank on the two sustainability-linked transactions.
"This collaboration further reinforces RHB Banking Group's commitment in providing end-to-end sustainable financing solutions for our customers, as well as increase the depth and breadth of the ESG funding and derivatives market in both Malaysia and Singapore," he said.
OCBC Bank head of global financial institutions and global commercial banking Tan Yuen Siang said the bank was delighted to support RHB in achieving sustainability goals while providing a competitive swapped US dollar rate, expanded funding choice by tapping on the liquid Singapore dollar bank market, and the ability to hedge foreign currency exchange risk with a cross currency swap.
"As we strengthen our foothold in Asean, which is expected to continue to register economic growth in 2023 despite global headwinds, we will continue to expand our suite of innovative product offerings to support our regional customers' evolving business needs and sustainability ambitions," he said.