Taipei Fubon becomes the first national bank to issue SLLs

  • By Kao Shih-ching / Journalist

Taipei Fubon Commercial Bank (台北 富邦 銀行) yesterday approved a three-year sustainability-linked (SLL) loan to audio electronics maker Merry Electronics Co (美 律 實業), the first such loan granted by a local bank.

However, the bank did not disclose the loan amount.

Foreign banks were the first to offer SLLs in Taiwan. DBS Bank Taiwan (星 展 銀行) provided NT $ 2 billion (US $ 70.66 million at current exchange rate) from SLL to AU Optronics Corp (友達光電) in 2019, followed by HSBC Bank (Taiwan) Ltd (匯豐 台灣 商) two SLLs totaling NT $ 450 million to Taya Group (大 亞 集團) and Sinbon Electronics Co (信 邦 電子) last year.

Photo: ANC

Like HSBC Taiwan and DBS Taiwan, Taipei Fubon would lower the loan interest rate if the borrower’s sustainability performance improved, including greenhouse gas emissions, energy management and efficiency. energy, the bank told the Taipei Times.

HSBC Taiwan has also encouraged its borrowers to use the loans for their operations related to green energy or reducing greenhouse gas emissions, but Taipei Fubon said it has no such requirements.

“While green loans are only used to finance green projects, the capital of SLLs can be used for general corporate purposes, according to the sustainability loan principal set by the Asia Pacific Loan Market Association.” , the bank said.

“This would give borrowers more flexibility, but we would encourage them to improve their sustainability performance through rate cuts,” he said.

The Financial Supervisory Commission is reviewing international standards on SLLs and is reportedly considering issuing guidelines for banks on the conditions for approving such loans, a commission official familiar with the matter said by telephone yesterday.

The guidelines could have a definition of SLL, as well as regulations on the disclosure of information by banks and debtors on how special loans improve the sustainability performance of companies, the official said.

The Taipei Exchange has named 16 specific goals for which the proceeds of a sustainable bond can be used, such as green energy, water conservation, affordable housing and food security, and the product of a SLL could apply for the same purposes, ”the official said.

Companies should set a sustainability goal before taking out a loan and explain how they would appoint an independent third-party body to assess whether debtors are meeting their goals, the official added.

Banks can set their own rules until the commission issues guidelines, but they must confirm loans are being used correctly, the official said.

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Lee J. Murillo

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