Shinhan Bank Borrows USD 400 Million for Foreign Currency Club Loan

Successful Fundraising as Korea's First Sustainable-Linked Loan Expanding ESG Management
Successful Recruitment Amid High Participation Demand

[Asia Economy Reporter Song Hwajeong] Shinhan Bank announced on the 14th that it has borrowed USD 400 million (approximately KRW 557.8 billion) through Korea's first sustainability-linked foreign currency club loan to secure stable foreign currency funding.

A Sustainability Linked Loan is a loan product that links the loan interest rate setting method to a company's sustainability activities, formalizing economic benefits such as interest rate reductions if the ESG (Environmental, Social, and Governance) targets set at the time of funding are achieved.

The amount raised is USD 400 million with a maturity of 5 years. The funding interest rate is set at the US 3-month risk-free benchmark rate (Term SOFR) plus 0.89% per annum, and under the sustainability-linked loan conditions, the borrowing interest rate is reduced by 0.05% per annum each year if ESG targets are met.

This foreign currency club loan borrowing was conducted amid increased market volatility due to interest rate hikes in major countries including the US and concerns about economic recession. By proceeding with Korea's first sustainability-linked loan, it maximized participation from global banks seeking to increase ESG-linked assets and was able to raise funds at a competitive interest rate.

A Shinhan Bank official said, "Through this first-ever foreign currency club loan borrowing in Korea, we were able to diversify funding sources while also reducing funding costs," adding, "Going forward, Shinhan Bank will actively promote ESG-linked funding to lead the domestic ESG market position."

As interest in environmental and social issues has increased in corporate profit activities recently, sustainable ESG management is being demanded worldwide. Sustainability-linked loans are rapidly growing mainly among Western European banks, and domestically, Shinhan Bank was the first to proceed with a sustainability-linked loan, attracting active interest from lenders.

This content was produced with the assistance of AI translation services.