RHB is an asset management company. It specializes in commercial banking, corporate banking, personal financial services and wealth management, retail equities, asset management, wealth management, treasury, structured finance, capital market services, and research. The company is based in Jakarta, Indonesia.On July 27th, 2021, RHB was acquired by Allianz Global Investors. The terms of the transaction were not disclosed.
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Nov 30, 2022
Agrobank president and chief executive officer Tengku Ahmad Badli Shah Raja Hussin delivers a speech during the Kongsi Nikmat Bersama Agrobank programme.-YAP CHEE HONG/The Star THE role of financial institutions (FIs) has evolved from just being an intermediary for borrowing and lending to being the driver of capital in the transition towards a green and sustainable future. Intense pressure from key stakeholders, including regulatory authorities and investors, has prompted businesses to rapidly integrate sustainable practices into their decision-making processes. Channelling capital to where it matters The demand for sustainable finance will continue to grow, driven by, among other things, the focus on value-based investing, increasing demand for infrastructure and heightened awareness of climate change. The rapid progress in sustainable and climate financing presents a challenge in capacity to FIs and regulators, to ensure that Malaysia is well-positioned at the forefront of sustainable and climate finance. This refers to financing transactions that incorporate environmental, social and governance (ESG) and climate-related risks into the overall credit risk assessment and financing decision-making process. These types of financing are targeted to facilitate the sustainability initiatives of an organisation and its transition into a low-carbon world. Amidst the focus on ESG and sustainability, funding that has been discontinued includes, among other things, the financing of new coal-fired power and thermal coal mine projects, while the stance on ‘No Deforestation, No Peat and No Exploitation’ has also been adopted. RHB to support SMEs Moving forward, the RHB Banking Group will work towards supporting small and medium enterprises (SMEs). “This is being done through creating awareness and understanding of ESG as well as the benefits of integrating ESG aspects into their businesses for sustainable growth,’’ said RHB group chief sustainability and communications officer Norazzah Sulaiman. Under the sustainability financing program (SFP) for SME and retail customers, RHB’s target is to grant RM1bil in new financing by 2025. As at end of September, 2022, RHB has extended more than RM380mil through the SFP. A total of seven socially responsible investing (SRI)-authorised funds had been launched by RHB Asset Management, with assets under management of RM1.24bil, as at September 2022. RHB was the sole lead arranger and manager for Cagamas’ issuance of RM300mil two-year Asean sustainability bond in October 2021. In December the same year, it structured and executed Malaysia’s first Green Cross-Currency Interest Rate Swap transaction, set against ESG-linked key performance indicators to hedge a US$100mil two-year sustainable loan. It was also the sole principal adviser, sole lead arranger, joint lead manager, facility agent, adviser and commodity trading participant for SME Bank’s RM3bil Sukuk Wakalah Programme, the country’s first sustainability sukuk by a development FI. The group has launched its five-year (2022-2026) Sustainability Strategy and Roadmap, based on three key pillars: sustainable and responsible financial services, embedding good practices, as well as enriching and empowering communities. Under the first pillar, the group’s role is to integrate ESG considerations into its business and decision-making processes, while nurturing customers towards achieving sustainable growth. The group aims to mobilise RM20bil in sustainable financial services; as at September 2022, the group’s year-to-date achievement is RM11bil across its lending and financing, capital market and advisory, wealth management, as well as investment and insurance businesses. Of this amount, about 40% is in green financing, 31% in social impact financing and 29% in ESG-linked activities. Managing its own carbon emissions is core to achieving its aspiration to be carbon neutral by 2030, added Norrazah. The group targets to achieve a 45% in reduction in carbon emissions intensity per employee by 2026, against a 38% in baseline year 2016; the group is close to achieving its 2022 target of 42%. As at June, 2022, RHB’s coal exposure has been reduced to about 0.9% of its total non-retail loans or financing. OCBC stresses on education The challenge for FIs is to educate their clients on the cost-benefit of embracing sustainability. “OCBC Bank (Malaysia) is highly encouraged by the commitment and enthusiasm shown by its top tier clients, primarily the government-linked companies and large conglomerates, for sustainable financing,’’ said OCBC Bank (Malaysia) managing director, senior banker and head of investment banking Tan Ai Chin. This follows the signing of a memorandum between OCBC Bank (Malaysia) and Alliance Bank Malaysia with Bursa Malaysia to introduce sustainable financing to public-listed companies. OCBC’s sustainable finance commitments stood at S$34bil, as at December 2021, surpassing its initial target of S$25bil by 2025; a new height has been set for S$50bil in its portfolio of sustainable finance assets by 2025. Among notable transactions are the world’s first Islamic multi-currency sustainability-linked financing for the Axiata Group and the inaugural sustainability-linked bond issuance by Sunway REIT. These financing instruments incentivise customers via lower financing costs in return for achieving pre-determined sustainability targets of reducing their overall carbon emissions. Failure by customers to meet the minimum threshold in the reduction of carbon emissions shall lead to a ‘penalty’ in the form of higher financing costs. OCBC is a signatory to the Equator Principles and Poseidon Principles – globally recognised frameworks that provide standardised guidelines to assess, as well as manage ESG and climate-related risks in project financing and ship financing respectively. Among the challenges is to convince investors to prioritise the sustainability agenda over targeted-investment returns as part of the investment decision-making process. The appetite for sustainable financing instruments – SRI bonds and sukuk – has not been translated into a more competitive yield offered by investors compared to plain vanilla bonds or sukuk issuances, said Tan. The recently launched SRI-linked Sukuk Framework by the Securities Commission should serve as a fresh catalyst for a more diversified type of ESG sukuk issuance in Malaysia. It is a challenge to gauge the level of acceptance of these issuances, given the profit rate adjustment feature, especially if it involves a step down in profit rates when the agreed sustainability targets are achieved. Bank Islam pursues green financing As it aspires to facilitate a just climate transition, Bank Islam is developing targeted products that include low-carbon financing for SMEs and ESG-linked financing for corporates. Currently, it is focussed on companies engaged in renewable energy (RE) and sectors with direct climate mitigative capacity, or positive social impacts. “Bank Islam has approved RM2.62bil in green financing projects in RE, sustainable waste management, sustainable public transportation and green manufacturing,” said Bank Islam Malaysia group CEO Mohamed Muazzam Mohamed. It targets to increase its green financing portfolio to RM4bil by 2025. Bank Islam utilises established guidelines issued by Bank Negara, especially the Climate Change Principles-based Taxonomy, to classify financing exposures and financed entities in accordance with their climate risk. As it is guided by shariah values, Bank Islam is also a practitioner of value-based intermediation, where the Association of Islamic Banks in Malaysia has issued sector guides to help assess the sustainability practices of entities in sectors such as palm oil, oil and gas and manufacturing. The main challenge in climate financing is to establish systems and processes to ensure that the best available data relies on Bank Islam’s internal operational footprint, as well as its financed emissions arising from its exposure in various sectors. For 2023, Bank Islam plans to increase direct engagements with customers on their climate transition plans and address ESG-related concerns that arise from its due diligence process. Bank Islam has implemented systems to ensure that ESG due diligence and screening are considered in financing approvals. Considering the current economic climate, Bank Islam is concerned about the additional costs in undertaking the transition, in the near term. This is both in terms of material or product supply availability and the immediate effect on available funds for requisite investments. BSN expands environmental role Bank Simpanan Nasional (BSN), which is strong on the social front, plans to strike a good balance between environmental, social and governance aspects. “We have to expand sustainability efforts on environment and climate change,” said BSN chief executive Jay Khairil Jeremy Abdullah. He added, “From the oversight perspective, the need for us to have the governance, structure and processes in place, is in tune with what we do as a bank, as we are so highly regulated.” BSN is very much a retail bank; it is not in the league of those giving out big corporate loans, that are cautious on companies in terms of their carbon emissions. Nevertheless, BSN has a part to play in fighting climate change. The onus is on the bank to find that niche, which is the journey it is embarking on, to close that gap, said Jay Khairil. As a development FI and a pure retail bank, the challenge for BSN is to steer a course in terms of carbon emissions and the sustainability agenda and integrate them in line with ESG standards. BSN also works together with like-minded partners such as financial technology startups, which are aware of ESG considerations and are transitioning to perform better. Agrobank to carve its niche Agrobank is in the midst of integrating sustainable finance throughout its existing program offerings and supporting clients’ efforts to obtain certifications in sustainability. It is encouraging the adoption of sustainable practices throughout the agricultural value chain through sustainability-linked programmes and products. Within its own operations, Agrobank will continue to promote environment-friendly, more specifically, energy efficient practices, to inculcate a sustainability mindset among its employees. “The role of the bank is to help accelerate Malaysia’s ESG and climate change agenda, in line with our development mandate to promote sound agricultural development and uplift the well-being of the agricultural community,’’ said Agrobank president and CEO Tengku Datuk Ahmad Badli Shah Raja Hussin. Among the challenges is the issue of costs; sustainable solutions for the agriculture sector are costly as some of them involve new technologies that are not commercialized yet. Unlike large corporations, small and medium scale as well as micro enterprises, or even entrepreneurs, struggle to implement these sustainable solutions due to lack of motivation or incentives. “That said, we see great potential in the agriculture sector and we aspire to enhance our product offerings to support our agricultural communities in their sustainability journey,’’ said Ahmad Badli Shah. Persuading clients to come onboard the sustainability journey is another challenge. Many clients, especially smallholders, still see sustainability and profitability as competing goals, especially when it comes to agricultural practices. This is where they must decide between sustainable and conventional farming. Agrobank strives to provide more insights on the benefits of joining the sustainability journey. Besides incorporating sustainability into its corporate strategy, Agrobank has included sustainability targets in its internal operations and for its customers. “We envisage our sustainability strategy will allow us to continue to carve our niche in the agriculture industry through our continuous efforts to support customers especially those who are keen to come onboard the sustainability journey,’’ added Ahmad Badli Shah. Rise of ESG, SRI & Islamic finance Amidst these rapid developments in ESG and sustainability, Malaysia has maintained its number one position in the Islamic Finance Development Indicator for the second straight year. Malaysia leads in the SRI sukuk issuance among the Asean6 countries, accounting for US$3.9bil of issuance value or 56% of the total Asean SRI Sukuk issuance, as of November 2021. Between 2016 and 2020, the Asean6 markets saw significant increase, at a compound annual growth rate (CAGR) of 198%, in the issuance of sustainable bonds and sukuk for financing growth. These were aligned with ESG principles, with an issuance value at about US$29.8bil, as of November 2021. The issuance of sustainability-themed shariah-compliant sukuk had grown at a CAGR of 278%, and reached about US$7bil in November 2021. As part of the innovation journey, the first US dollar sovereign sustainability Sukuk was issued by the Government of Malaysia in April 2021, aligned with the Asean Sustainability Bond Standards. Companies in Malaysia have easy access to sustainable financing; more than 90% of FIs have at least one sustainable financing product offering, as stipulated in the Joint Committee on Climate Change (JC3) Report on the Sustainable Finance Landscape in Malaysia. The sustainability journey ahead is expected to be filled with milestones in innovative financing, further cementing Malaysia’s position among the top in the region. For more insights into the world of ESG, visit https://staresgawards.com.my/issues.aspx to view and download the monthly StarESG pullouts. Article type: free User access status: Agrobank president and chief executive officer Tengku Ahmad Badli Shah Raja Hussin delivers a speech during the Kongsi Nikmat Bersama Agrobank programme.-YAP CHEE HONG/The Star Tan Ai Chin, managing director, senior banker and head of investment banking of OCBC Bank (M) Bhd, in her presentation at a webinar said that: "ESG has become a matter of survival and longevity for business.” [Pls crop mugshot/profile of the lady on the right] Norrazah Sulaiman, Group Chief Communications Officer, RHB Banking Group. Bank Islam Malaysia Berhad Acting Chief Executive Officer Mohd Muazzam Mohamed. Interview with Bank Simpanan Nasional (BSN) chief executive Jay Khairil Jeremy Abdullah @ Wisma BSN 08 NOVEMBER 2022 一CHAN TAK KONG/The Star. Subscribe now to our Premium Plan for an ad-free and unlimited reading experience! Topic:
RHB Frequently Asked Questions (FAQ)
Where is RHB's headquarters?
RHB's headquarters is located at District 8, SCBD Lot 13, Jakarta.
What is RHB's latest funding round?
RHB's latest funding round is Acquired.
Who are the investors of RHB?
Investors of RHB include Allianz Global Investors.
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