CIMB Islamic Bank Berhad has entered into an RM1 billion Sustainable Collateralised Commodity Murabahah transaction with Standard Chartered Saadiq Malaysia, enhancing its position in sustainable finance, as well as Islamic treasury and capital markets.
CCM is a Shariah-compliant financial instrument to obtain efficient funding secured by high quality Islamic sukuk assets. The development of liquid secured funding on sukuk has been historically challenged by the inability to have efficient counterparty risk management features, as well as collateral substitution flexibility. With the CCM, the Islamic financial market is provided with a viable alternative to the conventional Repurchase/Reverse-Repurchase Agreements (Repo/Reverse Repo).
All transaction proceeds of the CCM will be earmarked to eligible Shariah-compliant assets/projects that fall within the boundaries of CIMB Group’s Sustainable Development Goals Bond and Sukuk Framework.
CIMB will be providing sustainable treasury solutions to its clients and support from industry groups such as the Financial Markets Association of Malaysia and the Association of Islamic Banks in Malaysia. We are very happy to partner with Standard Chartered Saadiq Malaysia to enable the landmark sustainable CCM transaction,” said Ahmad Shahriman Mohd Shariff, Chief Executive Officer of CIMB Islamic.
“This deal underpins both banks’ devotion to continue the innovative development in the environmental, social, and governance (“ESG”) space as well as our common objectives to further advance the suite of Shariah-compliant products,” said Mohd Suhaimi Abdul Hamid, Chief Executive Officer of Standard Chartered Saadiq Malaysia.
Adnan Zaylani Mohamad Zahid, Assistant Governor of Bank Negara Malaysia, who notes that the Islamic finance industry is in a strong position to facilitate the transition towards sustainable practices. “The industry has an encouraging track record in the sustainable finance space, as evident from the sovereign and corporate sustainability sukuk issuances to finance green and social-related projects.”
“Islamic financial institutions play a major role in driving the sustainability agenda in Malaysia hence, it is encouraging to see players such as CIMB Islamic and Standard Chartered Saadiq Malaysia keep the momentum going with this landmark deal which furthers the Islamic and ESG convergence. CIMB is committed to achieving Net Zero greenhouse gas emissions, including Scope 3 financed emissions by 2050, as well as its target to mobilise RM30 billion in sustainable finance under its Green, Social, Sustainable Impact Products and Services (“GSSIPS”) Framework by 2024.
Both CIMB and Standard Chartered share a long history of partnership, having collaborated on many firsts in the market. These include the landmark MYR2.45 billion sustainability-linked derivative transaction – the world’s first Malaysian Ringgit-denominated transaction of its kind and Asia’s largest ESG-linked derivative trade when it was issued in October 2021. Standard Chartered Bank was also a Joint Lead Manager for the Sustainable Taiwanese Formosa Bond and US 144A Sustainable Bond issuances by CIMB, both of which were landmark maiden capital market trades for Malaysia.
