SHARM EL-SHEIKH: Mashreq Bank, the oldest privately owned bank in the UAE, will increase the amount of its sustainable financing to $30 billion by 2030, a senior official said.
"There’s a huge appetite for green and other forms of sustainable finance, and we only see it is increasing,” Tarek El-Nahas, senior executive vice president and group head of international banking at Mashreq Bank, told Arab News.
He added: “The regional economy is still very robust, and MENA is the fastest growing region globally, so we are not seeing downward pressure here.”
However, there is also a misconception that green lending and green finance are a cost to businesses, which El-Nahas rejected.
“We are seeing that greener forms of finance can also succeed, and because they are often very-long tenure deals, they generally make returns across the economic cycle,” he said.
Mashreq Bank, participating at the UN Climate Change Conference in Egypt, had facilitated deals worth $13.5 billion in sustainable financing over the past two years across the Gulf Cooperation Council, Egypt, Turkey and India.
“It included a range of deals and projects, including a sustainability-linked dual tranche of Islamic or conventional syndicated term loan for Nogaholding in Bahrain,” El-Nahas said.
This deal is the largest ever sustainability-linked loan in the entire Middle East and North Africa region. But, he revealed that the bank is also open to other avenues of financing.
“We are sector agnostic and follow a broad-based approach, covering sectors like financial services, water, etc. In addition to this sustainable finance, we facilitated $1.3 billion in water-related projects to help with climate adaptation and build resilience to water scarcity and climate-related disasters.”
El-Nahas said the bank expects robust demand for sustainable finance as its clients are beginning to implement their transition strategies and are ready to facilitate and advise.
“There is great appetite, and we have capital ready to deploy. Our greatest challenge is identifying bankable projects, but once we do, we move quickly,” El-Nahas added.
The bank has several clients in the energy sector and it plans to usher them through these volatile times by managing risks and facilitating transition strategies.
“We will be helping them access the appropriate sustainable financing for their capital and operating expenditure or even retraining their workforce and increasing awareness,” he said.
The bank also believes there is a bright prospect for green bonds meeting sustainability targets, especially green bonds, loans, and sukuks.
“These are particularly untapped markets that are set to flourish because government entities, sovereign wealth funds, and the private sector have occupied this space,” pointed out El-Nahas.
“We’ve seen a healthy appetite for green bonds and sukuks, which are often over-subscribed and involve the big global investors buying into both sovereign and corporate debt in the region,” he added.
This move toward sustainability financing is a positive sign for any economy and the growing sophistication of any financial sector, and this change is inevitable.
