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China Green Finance Awards

Best green bond bank 2017

Shanghai Pudong Development Bank

Shanghai Pudong Development Bank is one of the second-tier national commercial banks in China. There is no way for the Shanghai-based bank to match the country’s big four state-owned commercial banks in terms of green lending, but it has established itself as a leading player in the domestic green-bond market.

In 2014, as a lead underwriter, SPDB organized the issuance of corporate green bonds for the wind power generation unit of China General Nuclear Power Corp, China’s largest nuclear power generator. The bonds, backed by the unit’s green credits, were the first green bonds ever floated on the domestic interbank market. Their proceeds, Rmb1 billion ($146 million) in total, were used to support the unit’s five wind power farms in northwest China.

SPDB strengthened its position as a leading green-bond bank by floating three batches of green bonds totalling Rmb50 billion on China’s interbank market in the first seven months of 2016. The bond proceeds were to be invested in a wide array of projects across the country, including energy saving, renewable energies, alternative energy vehicles and environmental protection.

That was the largest green-bond issue ever made by a Chinese bank. But what impressed participants in China’s green-bond market most last year is not the bond issue itself, but the efficiency and transparency it demonstrated in allocating the proceeds of the green bonds. SPDB regularly disclosed the progress in its use of the bond proceeds, and by the end of the year, just five months after it had completed the placement of the bonds, it had allocated more than 90% of the proceeds for projects it had previously announced.

Last year, banks in China placed 39% of the green bonds issued worldwide. Many Chinese banks tapped the green-bond market to finance various projects, but they were not as efficient as SPDB in making use of the bond proceeds. There were often long delays between their green-bond issues and the allocation of proceeds, leading industry observers to question whether or not the proceeds were put to other, undisclosed uses in the intervening period.

As a result, an important criterion in gauging a bank’s commitment to promoting green finance is its efficiency and transparency in allocating the proceeds of green-bond issues. On that front, SPDB, whose general manager is Zhen Guangming, has served as a role model for its domestic peers.

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