MKB raises debut ESG-linked loan
MKB (the Bank) has raised its debut ESG-linked loan for USD 20 million from Landesbank Baden-Wuerttemberg (LBBW), one of the green banking leaders in Europe.
The deal was preceded by active cooperation between MKB and LBBW on implementation of structural sustainable elements to the existing framework documentation between the parties.
MKB is the first bank in Russia to raise a loan linked to independent assessment of its sustainability performance, specifically ESG rating of RAEX Europe.
This facility follows MKB’s long-lasting efforts in building up a sustainable business model and aims at further incentivizing the Bank on its path to sustainable development.
The debut loan is linked to MKB’s progress in terms of sustainable development as independently assessed by the rating agency RAEX Europe. Should the ESG rating of the Bank, being currently BBB[esg], improve during the life of the loan, the interest rate on the loan will decrease. This loan product structure highlights MKB’s commitment to contribute to more sustainable future and to further improve its performance under three components of the rating assessment: environmental, social and governance.
The loan maturity is 2 years, securing comfortable timeframe for material improvements in terms of the ESG performance and, at the same time, ensuring diversification of the Bank’s liabilities. All the underlying assets are subject to two-stage sustainability screening: against MKB’s own environmental and social policy based on EBRD and IFC standards, as well as LBBW’s sustainability principles.
“This transaction is another important milestone for our Bank. We are now inspired for active sustainable development not only by our shareholders, directors, management, employees and clients, but also by our international partners with impressive progress in implementing ESG principles throughout their activities. We are honored that our ESG-linked efforts were recognized by a green market professional and that with a new innovative sustainable product LBBW can participate in our ESG progress covering all business processes and products,” – commented Elena Finashina, Head of Sustainable Development Division at MKB.
“Sustainability is one of LBBW's strategic priorities. That is why we also want to accompany our customers on their way to sustainable business models. We are pleased that we are also advancing the topic of sustainable financing internationally with our first ESG loan in Russia and would like to thank our partner MKB for the excellent cooperation”, commented Torsten Biesel, Head of Financial Institutions at LBBW.
Landesbank Baden-Württemberg (LBBW) is both a Mittelstands-minded universal bank and the central bank of the savings banks in Baden-Württemberg, Saxony and Rhineland-Palatinate. With total assets of EUR 257 billion and 10,000 employees (as of 31 Dec. 2019), LBBW is one of the largest banks in Germany. Its core activities are the business with corporate customers, in particular small and medium-sized enterprises and the private customer business, as well as savings banks. A further focus is placed on real-estate financing as well as the customer-oriented capital market business with banks, savings banks and institutional investors.
About RAEX Europe
Rating-Agentur Expert RA GmbH (RAEX-Europe) is an independent European Credit Rating Agency, affiliated with the international group RAEX, which has more than 20 years of experience in rating and analytical industry.
The Agency is registered by ESMA (European Securities and Markets Authority) and received ECAI status (External Credit Assessment Institution) in 2015. The head office of the Agency is located in Frankfurt am Main.
RAEX-Europe assigns classic credit ratings according to the international scale as well as non-credit ESG ratings (environmental, social & governance). The Agency also issues the ESG rankings, Green Bond Second Opinions, as well as organizes business events and meetings.
In 2018 together with the leading Chinese rating agency CCXI, the Pakistani VIS Group and the Islamic rating agency IIRA, RAEX-Europe signed a memorandum dedicated to the preparation and publication of analytical products for the Silk Road countries. The agency is a signatory to the UN PRI initiative on ESG in Credit Ratings, stakeholder endorser of the Principles of Responsible Banking, TCFD supporter, and member of LuxFLAG, the Luxembourg Finance Labelling Agency.