Qatar National Bank and the London-based bank HSBC have launched a green energy-focused financing instrument.
Under the agreement, Qatar National Bank will loan cash to HSBC. Qatar National Bank will in turn receive green bonds, which are debt instruments designated to raise money for environmental projects. HSBC will then allocate an amount equal to the bond purchase price to climate and environmentally friendly businesses and projects that promote a low use of carbon, with a focus on “clean transportation,” the official Qatar News Agency reported.
A Qatar National Bank spokeswoman confirmed the agreement with HSBC to Al-Monitor.
Financial agreements that stipulate the sale of bonds for cash are referred to as repurchase or repo agreements. Entities often use them to raise cash.
HSBC's head of markets for the Middle East said the instrument will help make more cash available for investments in green technology.
“Launching a new green product is an important development for the bank and our clients, and further increases liquidity for the institutional green finance market,” said Antoine Maurel in a press release sent to Al-Monitor.
The green assets must meet the criteria of HSBC's green bonds framework, per the press release. This framework mandates that businesses or projects maintain sustainable practices in their core operations, among other things.
Qatar National Bank’s ownership is evenly split between the state of Qatar’s sovereign wealth fund, the Qatar Investment Authority, and members of the public who can purchase stock in the company. The most recent available stock price for Qatar National Bank was $38.50 a share on Feb. 10.
Qatar is one of the biggest suppliers of liquified natural gas in the world and is a member of the Organization of the Petroleum Exporting Countries, or OPEC. Like other Gulf states, Qatar has started to explore renewable energy sources in recent years such as solar energy.