Shinhan Bank Partners With GCF on Currency Hedge
Shinhan Bank entered into a foreign exchange derivative transaction worth about $200 million with the Green Climate Fund (GCF) on August 6. This is the first time the GCF has engaged in a foreign exchange derivative transaction since its establishment. Through this transaction, Shinhan Bank has achi
On August 6, Shinhan Bank entered into a $200 million foreign exchange derivative transaction with the Green Climate Fund (GCF), marking their first such engagement since the GCF's inception. This move aims to broaden their cooperative relationship from the investment sector to foreign exchange management. The foreign exchange derivative is a financial tool used to mitigate the risk of asset value decline due to currency exchange rate fluctuations.
The GCF, based in Songdo, Incheon, gathers funds in various currencies from donor countries globally. Exchange rate volatility impacts the actual value of these contributions, necessitating hedging strategies. The GCF adopted a foreign exchange hedging program and chose Shinhan Bank as its inaugural partner. Previously, in September of the previous year, Shinhan Bank's London Branch worked as a co-investor in the 'H2R' (Hardest-to-Reach Initiative), an eco-friendly energy fund for Africa, alongside the GCF, IFC, and BII.
This $246.5 million fund supports projects that provide clean energy to 17 African nations with inadequate power supplies. The project, deemed the first global impact fund investment case in Korea, is projected to provide power to approximately 70 million local residents and cut carbon dioxide emissions by 4 million tons. Shinhan Bank's past collaborations with the GCF have solidified a foundation of trust between the two entities.
A Shinhan Bank representative expressed their aspiration to contribute to the advancement of global green finance through further collaborations with the GCF.
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