As the net zero transition becomes top of mind for business leaders and policymakers around the world, affluent investors in Asia are gradually recognising the importance of incorporating sustainable solutions into their portfolios.
In Thailand, high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals and their families are beginning to incorporate ESG (Environmental, Social and Governance) factors into their investment decisions, says Saranya Arunsilp, Country Head, Thailand, Global Private Banking and Wealth Management at HSBC.
However, as the bank ramps up its efforts to educate clients on the importance of sustainable finance, awareness of ESG is growing.
“ESG investments are gaining popularity among Thai investors as HSBC has been educating our clients and offering them relevant sustainable finance solutions,” explains Arunsilp.
“Our clients are starting to understand that sustainability is important for growing their business and investments, but it will take some time before they see the performance associated with sustainable products.”
A more conducive regulatory environment is also expected to fuel demand for sustainable investments. Earlier this year, the Stock Exchange of Thailand introduced a Sustainability Reporting Guide for listed companies, together with ESG metrics for each industry group.
HSBC is well-positioned to capture a big slice of this growing green market as it has established an enviable track record of completing sustainable finance deals in Thailand. The bank recently supported a prominent global petrochemical company in issuing its debut THB10 billion (US$283 million) Sustainability-Linked Bond (SLB). This deal was the largest THB SLB issuance in Thailand.
HSBC was also the Joint Lead Manager and Joint Bookrunner for the first green bond issued by a Thai policy institution, the Bank for Agriculture and Agricultural Cooperatives. The proceeds were then used to fund forestry and environmental conservation projects.
In another milestone, the bank introduced the first Green Deposits in the country for two large Thai corporates. The Green Deposit aims to encourage Thai companies to fulfill their sustainability objectives by investing their surplus cash balances with HSBC, which will then be allocated to eligible businesses and projects.
Furthermore, HSBC completed a trio of firsts for a Thai client by executing their inaugural Sustainability-Linked Loan, Sustainability-Linked Supply Chain Financing Solution and Sustainability-Linked Hedge.
A Deeper Presence on the Ground
To more effectively service its HNW and UHNW clients, HSBC opened a new private banking business in Thailand last year. The move is timely as rising affluence in the country is driving demand for wealth planning, investment diversification and international banking.
The expected rebound in intra-regional trade and activity is also expected to lead to the creation of private wealth in Thailand as businesses expand. Against this backdrop, international banks like HSBC—with a global footprint and full range of capabilities to serve the fast-changing needs of affluent clients both onshore and offshore—will have a competitive edge in the country.
In recent years, The Bank of Thailand has also introduced a series of measures to relax foreign exchange regulation and encourage greater flexibility in the financial markets under the Capital Account Liberalisation Master Plan, opening up opportunities for selective offshore investments.
The new private bank is HSBC’s second onshore business in Southeast Asia after Singapore, and will provide Thai clients with access to international capital markets by leveraging its existing infrastructure of advisory, investment methodologies, controls and systems in Asia. The Thailand-based team will cover client management and advisory services, while clients’ assets will be booked in HSBC Global Private Banking in Singapore, a preferred wealth management hub for Southeast Asian HNW individuals.
“We successfully launched our onshore private banking business in Thailand last year, and second onshore private banking business in ASEAN, to offer a distinctive, onshore experience to serve growing wealth needs in Thailand. Our team is able to leverage the HSBC Group’s expertise and global network to serve our Thai friends better,” says Arunsilp.
As private banking is very much a people-centric business, Arunsilp believes that it is important to have a dedicated team on the ground to develop a more intimate relationship with clients, and better understand their unique wealth needs.
The expansion of the private banking business in Thailand is part of HSBC’s broader strategy to grow its wealth management footprint in Southeast Asia and invest in its wealth capabilities as it aims to provide best-in-class products and services for clients, and deliver on its ambition to become the leading wealth manager in Asia.
Achieving Net Zero
HSBC’s Thai businesses will also play their part in helping the bank achieve its target of transforming its operations and supply chain to net zero by 2030, and to do the same for financed emissions in the portfolios of its clients by 2050 or earlier.
This transition will involve an investment of between US$750 billion and US$1 trillion over the next 10 years. Financing of coal-fired power and thermal coal mining will also be phased out by 2030 in markets under the European Union and Organisation for Economic Co-operation and Development (OECD), and in other markets by 2040.
“Achieving net zero requires significant changes. The financial services industry has an important role in ensuring that capital is allocated to support projects and investments needed to fulfill these goals,” says Giorgio Gamba, CEO of HSBC Thailand.
“The transition to a net zero economy is the key to unlocking long-term sustainable growth, protecting the financial system from climate risk and safeguarding society,” he adds.
HSBC’s sustainability strategy can be boiled down to three key components: becoming a net zero bank; supporting customers in their transition journey; and unlocking new climate solutions. In doing so, the bank also wants to help transform sustainable infrastructure into a global asset class through the development of a pipeline of bankable projects.
HSBC views collaboration with its clients and other stakeholders as key to achieving its sustainability objectives. Says Gamba: “In partnership with our clients, we will help develop de-carbonisation plans starting with high transition risk sectors. This will allow us to understand how they are incorporating climate change into their business and to identify how we can support their transition.”
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