The International Finance Corporation (IFC), a member of the World Bank group, has subscribed to Thailand’s first financial institution-issued green bond via a $60-million investment in TMB Bank, one of the country’s leading banks, according to a statement on Wednesday.
IFC becomes the sole investor of the $60-million green bond issued by TMB Bank. The proceeds will be used exclusively to finance climate-smart projects, particularly renewable energy, the bank said.
“The pioneering green bond will provide an alternative source of long-term green finance in the country. Further, it will help Thailand achieve its target of reducing greenhouse gas emissions by an unconditional 20 per cent by 2030 relative to its Business As Usual (BAU) scenario,” the IFC said.
The subscription forms part of IFC’s proposed $150-million financing in the Bangkok-based bank, which was established in 1957 as Thai Military Bank.
TMB will also issue a second bond, raising $90 million from IFC, to support its SME lending program and increase access to finance for Thai SMEs, a key contributor to the local economy. The SME/green US dollar-denominated bonds will have a seven-year tenor.
CEO Piti Tantakasem said, the green bond underscores TMB’s commitment to further stimulate private investments in renewable energy and efficiency. The bank aims to expand its green lending portfolio from $280 million to $470 million in the next five years with guidance and support from the IFC.
“Environmental sustainability is one of the pillars of TMB’s sustainable banking framework, and the bank has already financed many projects related to renewables, energy efficiency, and waste reduction,” Tantakasem said.
IFC and TMB Bank first collaborated in 2012 when IFC granted a loan worth $100 million to support Thai SME exporters, who were devastated by the country’s most severe flood, through TMB.
“This pioneering green bond transaction by TMB and IFC’s second green bond investment in the East Asia and Pacific region will play a catalyzing role in developing the nascent green bond market in Thailand,” said Vivek Pathak, IFC Director for East Asia and the Pacific.
TMB is currently operating under two segments, commercial banking and retail banking, and has subsidiaries including Phayathai Asset Management Co., Ltd., Designee for ETA Contract Ltd. and TMB Asset Management Co., Ltd.