Strategic cooperation floods in for banks’ greener visions

November 12, 2021 | 10:48
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International financial institutions are initiating partnerships with Vietnamese banks and other businesses through financing agreements, contributing to the energy transition.
Strategic cooperation floods in for banks’ greener visions
HDBank is attempting to go greener with its tie-up with German bank DEG, photo Le Toan

HDBank and DEG, a subsidiary of German investment and development bank KfW Group, last week signed an agreement on arranging capital worth around $200-300 million for the Vietnamese lender. DEG has committed to mobilising capital to help HDBank increase its financial capacity, enhancing its supplementary capital into 2022.

The parties are promoting the relationship between KfW and HDBank in Vietnam’s official development assistance schemes. Simultaneously, DEG will collaborate with HDBank to support European corporations to team with Vietnamese businesses and boost trade, investment, and global supply chains within the scope of the EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement.

In October, HDBank and Affinity International Investment Fund, one of the largest Asian private equity firms focusing on leveraged buyout and growth capital transactions, inked a $300 million agreement to help the bank assist Vietnamese firms with programmes that meet environmental, social, and governance (ESG) as well as sustainable development criteria.

The partnerships were officially confirmed within the framework of the UN’s COP26 climate summit and the bilateral visit to the UK by Vietnamese Prime Minister Pham Minh Chinh.

Both sides are coordinating programmes for HDBank to utilise ESG and climate-related funds from international organisations such as the Green Climate Fund, and taking into account the Sustainable Development Goals. They will work together on a programme to develop knowledge on ESG and climate change with hands-on experience, including integrating them into business and strategy, establishing a governance structure, capacity building, risk management, and collecting related statistics.

Besides DEG and Affinity International, the Ho Chi Minh City-based bank also struck a $100 million long-term loan sponsorship arrangement with Proparco for Vietnam’s renewable energy projects last week.

Previously in September, a $50 million loan granted by Proparco marked the first collaboration between the French Development Finance Institution and HDBank on rolling out climate-friendly projects.

Other foreign financial institutions are also eyeing Vietnam’s sustainable financing to boost economic and social development while minimising detrimental environmental impacts.

Elsewhere, Standard Chartered Vietnam has committed MoUs worth up to $8 billion in sustainable financing for three Vietnamese businesses – T&T Group, Geleximco Group, and Van Lang Investment and Education Management Corporation – to support their sustainability goals.

Standard Chartered Vietnam will arrange financing for T&T Group’s environment, waste treatment, liquefied natural gas-fired power plants, and renewable energy projects; Geleximco Group’s paper, pulp, and afforestation, power plants, tourism complex, and seaport projects; and Van Lang’s construction of a green university campus.

“We’re committed to Vietnam’s recovery and sustainable growth, and look forward to working closely with the government, our clients, and partners to support Vietnam’s sustainable development, economic recovery, and ambitious net zero targets,” said Michele Wee, CEO of Standard Chartered Bank Vietnam.

Meanwhile, Shinhan Financial Group chairman Cho Yong-byoung became Asia’s first private sector financial leader to deliver a speech at COP26, as he introduced Shinhan’s “Zero Carbon Drive,” the first declaration on carbon neutrality by an East Asian financial company.

“We have motivated other major financial companies in South Korea to follow suit this year,” he said. “We will communicate through existing channels in countries where Shinhan has a presence, like Vietnam, Indonesia, Kazakhstan, India, Japan, and China, so that we may serve as an Asian benchmark in the finance industry.”

Based on his belief that the role of finance is to help such companies’ transition to eco-friendly operations, Yong-byoung also unveiled Shinhan’s plan to provide $30 billion in green finance by 2030.

According to the group, these are part of efforts to internalise sustainable management. “ESG enables us to brace for uncertainties in the business environment and improve resilience,” the bank noted.

By Luu Huong

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