Singapore’s OCBC to Establish A USD500m Decarbonization Fund

Overseas-Chinese Banking Corp (OCBC) [OCBC:SP], the second-largest bank in Singapore, will establish a USD500m fund to finance decarbonization-focused businesses in Southeast Asia, as reported by Nikkei Asia on December 22. OCBC will collaborate with Mercuria Holdings [7347:JP] to start raising money from financial institutions and companies in Japan and Southeast Asia in early 2024. The fund will provide loans to businesses involved in developing renewable energy, such as hydrogen and ammonia, and decarbonization technologies. Mercuria’s shareholders include the Development Bank of Japan (DBJ) and the Japanese trading house Itochu [8001:JP].

The decarbonization fund follows a net-zero-aligned loan OCBC introduced in March 2023. Dubbed the OCBC 1.5°C loan, the financing solution provides incentives for corporates to set and work towards clear carbon emissions reduction targets aligned with internationally recognized, science-based net-zero decarbonization pathways for their sectors. On December 4, Singaporean real estate operator City Developments Limited (CDL) [C09:SP] became the first corporate to obtain the OCBC 1.5°C loan, securing a GBP200m (USD253m) sustainability-linked loan with interest rate incentives linked to annual decarbonization performance targets. These decarbonization-focused financing solutions reflect OCBC’s commitment to supporting its customers on their net-zero journeys. As for OCBC itself, the bank has achieved carbon neutrality in its operational emissions from 2022. Moreover, it has committed more than SGD25m (USD18.8m) to adopting energy-efficient technology and deploying solar energy systems for its operations in key markets, aiming to reduce 10,000 tons of carbon emissions over the next four years.​

Sources:

https://asia.nikkei.com/Business/Finance/Singapore-s-OCBC-to-launch-500m-decarbonization-fund

https://sg.finance.yahoo.com/news/ocbc-bank-launches-net-zero-180209504.html

https://www.ocbc.com/group/media/release/2023/cdl-secures-ocbc-1-point-5-degree-celsius-loan-singapores-first-net-zero-aligned-loan-for-corporates-to-drive-transition-to-a-low-carbon-economy.page

https://www.straitstimes.com/business/companies-markets/ocbc-to-invest-25-million-to-cut-carbon-emissions-by-approximately-10000-tonnes

https://www.zaobao.com.sg/finance/singapore/story20230321-1374586