Shinhan Bank announced on the 11th that it signed a foreign exchange derivative transaction worth ab..

Shinhan Bank announced on the 11th that it signed a foreign exchange derivative transaction worth about $200 million with the Green Climate Fund (GCF), an international organization under the UN, on the 6th.

This transaction is the first foreign exchange derivative transaction signed by GCF since its establishment. It is meaningful in that Shinhan Bank, a domestic commercial bank, hosted the first foreign exchange derivative transaction by an international organization under the United Nations. With this transaction, Shinhan Bank will expand its cooperation with GCF from the existing investment sector to the foreign exchange sector.

Foreign exchange derivative transactions are financial transactions used to manage risks from exchange rate fluctuations. GCF, which supports climate change response projects in various countries, is receiving contributions in various currencies from donor countries such as developed countries. Accordingly, the value of contributions may vary depending on exchange rate fluctuations. Therefore, GCF will sign a foreign exchange derivative transaction with Shinhan Bank to launch a foreign exchange hedging program using foreign exchange derivative transactions to reduce volatility in the value of contributions and support stable financial management.

GCF is an international organization established to support developing countries in reducing greenhouse gases and responding to climate change. In 2013, a secretariat was established and officially launched in Songdo, Incheon, and funds raised by countries around the world are used to support eco-friendly energy conversion and climate change response projects in developing countries.

Shinhan Bank has continued its cooperative relationship with GCF to expand global green finance. A typical example is the joint investment of the African eco-friendly energy fund ‘H2R (Hardest-to-Reach Initiative). Shinhan Bank’s London branch participated in the $246.5 million H2R fund created by global impact investment agency Acumen in September last year as a senior investor along with global development financial institutions such as GCF, International Finance Corporation (IFC), and British International Investment Corporation (BII).

H2R is a fund that invests in businesses that supply eco-friendly energy to Africa, where power supply is scarce. Shinhan Bank’s participation is the first global impact fund investment in the Korean financial sector, and the project is expected to provide power benefits to about 70 million people in 17 African countries and reduce carbon dioxide emissions by about 4 million tons.

An official from Shinhan Bank said, “It is meaningful to expand the scope of cooperation to this foreign exchange derivatives transaction following our investment in Africa’s eco-friendly energy sector with GCF last year. We will continue to discover various opportunities for cooperation with GCF and expand partnerships with international organizations and global financial institutions to contribute to revitalizing global green finance.”