Shinhan Bank Signs First Foreign Exchange Transaction with UN Green Climate Fund Worth USD 200 Million

Shinhan Bank announced on August 11 that it has signed a foreign exchange derivatives transaction with the Green Climate Fund (GCF), an international organization under the United Nations, totaling approximately USD 200 million.

This marks the first time the GCF has executed a foreign exchange derivatives transaction since its establishment. With this deal, Shinhan Bank has expanded its area of cooperation with the GCF from previous investments to include the foreign exchange sector.

Foreign exchange derivatives transactions are financial instruments used to manage risk arising from exchange rate fluctuations. The GCF, which supports climate change response projects in various countries, receives contributions in multiple currencies from donor countries including advanced economies. As a result, the value of these contributions can fluctuate with currency exchange rates. To mitigate volatility and support stable management of the fund's assets, the GCF launched a foreign exchange hedging program using derivatives, selecting Shinhan Bank as its partner for the inaugural transaction.

Shinhan Bank and the GCF have maintained a collaborative relationship to advance global green finance. A notable example is their joint investment in the H2R fund, an eco-friendly energy fund for Africa. In September of last year, Shinhan Bank's London branch participated as a senior investor in the approximately USD 246.5 million H2R fund established by global impact investor Acumen, alongside global development finance institutions such as the International Finance Corporation (IFC), British International Investment (BII), and the GCF.

The H2R fund invests in projects that supply renewable energy to regions in Africa suffering from insufficient electricity supply. Through these initiatives, the fund is expected to deliver power benefits to about 70 million people across 17 African countries and reduce carbon dioxide emissions by approximately 4 million tons.

A Shinhan Bank representative commented, "We are honored to have expanded our partnership with the GCF, from investing in Africa's eco-friendly energy sector to this recent foreign exchange derivatives transaction. We will continue to seek out various collaboration opportunities and strengthen partnerships with international organizations and global financial institutions to promote the development of global green finance."

Meanwhile, the GCF is an international organization established to support greenhouse gas reduction and climate change response efforts in developing countries. Its official secretariat was established in Songdo, Incheon in 2013, and the fund has been assisting developing countries in transitioning to renewable energy and responding to climate change using resources contributed by countries worldwide.

This content was produced with the assistance of AI translation services.