Deutsche Bank AG Aiming To Boost Green Bonds Investment To €1 Billion
Deutsche Bank AG is aiming to boost its investment into green bonds from €200 million ($224 million) where it stand now to over €1 billion ($1.121 billion), according to recent reports.
The move will follow on the heels of similar ones by the bank’s competitor’s, Barclays and Citigroup.
The planned expansion into green bonds will reportedly be beginning with the purchase of 10-year issues from the World Bank, based on a recent press statement from the bank.
According to Deutsche Bank AG’s group treasurer, Alexander von zur Muehlen: “The Green Bond market has matured during 2014, and the size and number of offerings has substantially increased, making green securities viable and prudent liquidity buffer investments.”
He added that the securities are making for “attractive returns.”
Bloomberg provides some further information and commentary:
The decision adds to evidence that the green bond market is blooming after issuances of securities linked to climate projects more than doubled to a record $38.8 billion last year.
Investors are snapping up bonds to finance the global expansion of clean energy, promoted by governments from the US to China to tackle climate change. The debt, issued by development banks or by project sponsors themselves, offers investors an alternative to volatile equities.
It’s also increasing the flow of cash for clean-energy developments in nations from Spain to Romania, which have reined in support for the industry. Investment in clean energy rose 16% last year to a record $310 billion, according to Bloomberg New Energy Finance.
With regard to Deutsche Bank, it ranked 8th last year in relation to the underwriting of green bond deals, based on data from Bloomberg New Energy Finance.
While the bank’s moves are notable, they’re still of a different scale than some other banks. Citigroup, for instance, recently revealed that it was intending to “lend, invest and facilitate deals worth $100 billion by 2025” in order to support projects to “fight” climate change and/or address environmental issues. Goldman Sachs and Bank of America have similar pledges as well.
Interesting. But, of course… until solid moves are made, this is all just talk after all.
As Citigroup’s CEO Michael Corbat noted recently though (when commenting on the $100 billion pledge): “Simply put, it is a $100 billion investment in sustainable growth. These efforts do not constitute philanthropy, nor do they represent costs. In fact, they reduce costs.”
Image Credit: Deutsche Bank AG
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the more money invested in Solar and Wind, the more money made. clean cheap and easy. big money making opportunities and the banks start to
make money on Solar and Wind. Its a money making, jobs creating, tax paying bussiness case.
While the 5x increase is nice. It is a tiny amount even after increase. How much do they have in FF bonds/loans? If they said “we plan to convert 50% of our FF bonds/loans to green bonds every year until FF fails below $500 Million and which point we will convert it all”. They claim “$1.27 trillion of assets under management (as of 9/30/2014)”, so $1B is a rounding error (less than their yearly management fees). Can you say green washing! With green bonds representing 0.02% of assets, if you get assigned to that department it is currently a demotion.
James this is the type of story that needs context, I am glad you at least point out it is only 1% of Citibank’s move. Fast tell me which investment you care about that has on 0.02% of your assets allocated to it.