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Changes expected in Malaysia after its taxonomy

The harmful effects from heat traps and changes in perceptions are building a case against financing fossil fuel. UN Sec-General has urged banks to stop their financing towards it.

Bank Negara Malaysia published a paper of climate change and principle based taxonomy providing an overview of the crisis and its impact on the finance industry stating that it will act as a guideline to ensure that the industries acted towards the contribution for climate changes.

Malaysia’s taxonomy is based on international markets and national experiences to ensure that it’s fully in line with the international based practices and definitions. The various published reports all suggest that many banks are developing a National green taxonomy even the World Bank. In Malaysia, the absence of sustainable taxonomy was observed even in the local Islamic banks which affected the financial system. The paper further reported that 12 financial institutions will implement a taxonomy to classify the climate risk and firm up the resilience in the country as Bank Negara Malaysia viewed that climate risk impacted on various common risks such as liquidity, Insurance ,market ,credit risk etc. Developing taxonomy is necessary as it hold the stakeholders accountable for their contribution towards climate changes and Bank Negara is working closely with the financial industries through the Joint committee to develop collective response urging Asia’s policy makers to develop a harmonized framework in an order that it meets the standards set across jurisdictions at the same time provide transparent funds to emerging markets.

Despite the efforts Maybank, CIMb, RHB banks provided $4.9 billions of loans for coal projects plugging the gap of 45international banks which had distanced from financing fossil fuels and thus bucking the trend of decarbonisation. Activist groups like Greenpeace and 350.org have urged the banks not to support the projects and Bank Negara Malaysia has reminded that it might require all banks to report their exposures to climate risks. In response to combat climate change Malaysian banks are adopting a reasonable lending policy and creating awareness among customers on sustainability issues. CIMB allocated RM3 billion for loans in sustainability projects and renewable energy financing packages for smaller companies. RHB bank has also developed a phased approach into its decision making practices. CIMB joined a coalition of 130 international banks having a combined asset value of $47million to realign their financing development and the Paris agreement on climate change developing two group wide policies, one pointing the overall sustainability and the other on environmental and social risks in business lending. Interest rates have been reduced for consumers seeking energy-efficient commodities.

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Banking

Goldman banker hired by the Citi bank

Citigroup has hired Luisa Leyenaar-Huntingford from Goldman Sachs. This new hire is to co-head its global infrastructure franchise. Because, it seeks to win more business from cash-rich investment firms focusing on infrastructure deals. Leyenaar-Huntingford will be based in London. Responsibility will be shared with Todd Guenther in New York.

The pair will work closely with industry teams covering healthcare, industrials, natural resources and clean energy transition (NRCET), technology and communications. Leyenaar-Huntingford helped in the establishment of the Goldman’s infrastructure franchise in her time at the Wall Street bank. They will team up with Citi’s Iberia co-head of banking, capital markets and advisory (BCMA) Jorge Ramos will continue to be a senior member of the global infrastructure franchise.

The infrastructure sector is poised for further growth, according to the memo. The memo was released by Citi’s global co-heads of the alternative assets group Anthony Diamandakis and John Eydenberg, and its EMEA head of BCMA Nacho Gutierrez-Orrantia. There was significant private investment demand across the globe to deal with environmental, energy, transportation, waste, communication, digital and other social needs.

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Banks make slow progress on UK gender pay

Major banks in Britain made a slight dent in their gender pay gaps. Several insurers went backwards. Companies in Britain with more than 250 employees have been required to publish the difference between the pay and bonuses of their male and female employees. They got a reprieve due to the pandemic, last year. The financial services sector has shown one of the largest genders pay gaps in Britain. The lack of women in senior jobs is the main reason.

Pay gap data from 21 major financial institutions showed a narrowing in their average mean gender pay gap. This is just 0.4 percentage points. Banks alone had a pay gap which narrowed by one percentage point. Ann Francke, chief executive of the Chartered Management Institute said that the UK’s financial services industry has often been singled out. It really does have to get its house in order. Goldman Sachs had the widest gender pay gap in the year to April 2020. Goldman posted a gender pay gap of 51.8%. The bank told the staffs that narrowing the gap further was a critical priority. A spokesperson for banking lobby group UK Finance said, that there is clearly more still to be done.

FTSE 100 insurers Prudential, Legal & General and M&G reported a widening in their pay gaps. Prudential’s UK gender pay gap widened to 45.2%. M&G also reported a widening in its pay gap in the most recent year to 30.5%. The M&G spokesperson said that they are determined to narrow their gender pay gap and will do this by achieving better representation of women in all roles at all levels of our organization. Legal & General’s mean gender pay gap widened to 30.8%.

The insurer said that the legal & general is tackling the underlying causes of its pay gap. This is by creating a more diverse workforce and a more inclusive culture through sustained, long-term action. Admiral had a gender pay gap last year of 12.8%. The 21 firms surveyed were Barclays, HSBC, Lloyds, NatWest, Standard Chartered, Bank of America Merrill Lynch, Goldman Sachs International, JPMorgan, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, PGMS (a Phoenix unit), abrdn, Schroder Investment Management, St James’s Place, Legal & General, Prudential, Admiral Group, Aviva and M&G.

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BOJ to lower inflation target-Japan’s finance minister

Japan’s outgoing finance minister, Taro Aso, said that he had proposed lowering the central bank’s 2% inflation target. This is when the prices took a hit from plunging oil prices. He was the finance minister for nearly nine years. The slump in oil price was among the main reasons the government could not officially declare an end to deflation. In his final news conference as finance minister, Aso said that he proposed to Governor Kuroda that, with oil prices falling this much, it would be hard to achieve 2% inflation. Hence, the target must be lowered at some point. He stated this by referring to Bank of Japan (BOJ) chief Haruhiko Kuroda.

Aso also said that the governor said he would do his best to achieve the target. This is stated by adding that policymakers must scrutinise at some point, why the BOJ’s inflation target of 2% has not been met. The remarks highlight how the government and lawmakers distanced themselves from the BOJ’s target years ago, despite central bank reassurances that achieving the target was possible by maintaining or increasing stimulus.

Aso was deeply involved in negotiations with the BOJ. After Kuroda took over as governor, he deployed a massive asset-buying program. This is for pulling Japan out of deflation. Aso supported the BOJ’s stimulus efforts. He is a member of the cabinet. And also, had raised many doubts that monetary policy alone can reflate the economy out of the doldrums. New Prime Minister Fumio Kishida is set to form a cabinet.

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