U.S. Markets close in 3 hrs 13 mins

OCBC Seeks More Green Loans to Maintain Lead in Southeast Asia

Chanyaporn Chanjaroen and Ameya Karve

(Bloomberg) -- Oversea-Chinese Banking Corp. aims to expand its lending to environmentally-friendly projects after this year building the biggest exposure to green loans among its Southeast Asian peers.

The bank has built a team of five to focus on sustainable financing after foraying into green loans last year and is looking to add bankers, said Mike Ng, the Singapore bank’s head of structured and sustainable finance. So far in 2019, OCBC has participated in more than $500 million of green lending, according to data compiled by Bloomberg.

More banks in Asia are piling into environmentally-focused loans after a regional association last year agreed on principles that standardize disclosure rules. While that should boost lending in the area, Asia has a lot of ground to make up. It accounts for just 21%, or $217 billion, of the total $1.02 trillion of sustainable debt globally, according to BNEF data.

“There’s much greater awareness now and a lot of pressure points on companies such as investors, non-government organizations, consumers and regulators,” Ng said in an interview last week.

OCBC wants to build a sustainable finance portfolio of S$10 billion ($7.3 billion) by 2022, and is almost halfway toward that goal, Ng said. The target will include lending classified as green loans as well as focused on environmental, social and governance initiatives, renewable energy, water and green transportation, he said.

Ng said OCBC started extending green loans after the Asia Pacific Loan Market Association laid out principles aimed at increasing transparency on the use of proceeds and on the environmental impact of projects.

The bank’s largest publicly disclosed green loan this year came from its involvement in the consortium providing S$785 million to Frasers Property Ltd. in March. The five-year term loan under the APLMA framework involves refinancing for a new wing of the Northpoint City project in Singapore, which uses low emissivity double-glazed glass and recycled water for toilet flushing.

Globally, BNP Paribas SA, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. top the league, with the total value of all such deals at $37 billion this year, according to data compiled by Bloomberg.

How Companies Get Cheaper Loans for Doing Social Good: QuickTake

Earlier this year, OCBC pledged to stop funding new coal-fired power plants to nudge governments toward renewable energy sources. However, the bank has no plans to extend that ban to palm-oil plantations -- some of which are blamed for illegal slash-and-burn land clearance that causes periodic haze in the region -- and to fossil-fuel energy.

“Can the world do without palm oil? Probably not,” said Ng. “How to manage those risks and encourage more sustainable practices is then the question. It’s just not practical for us to exit these sectors overnight.”

To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net;Ameya Karve in Singapore at akarve@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, ;Andrew Monahan at amonahan@bloomberg.net, Candice Zachariahs, Russell Ward

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.