Singaporean lender OCBC Bank has launched a sustainability-linked structured deposit for retail investors, the first of its kind in Singapore, which is aimed at enabling them to contribute to building a sustainable world.

For a minimum investment amount of S$5,000 (US$3,700), whether in cash or using their Supplementary Retirement Scheme funds, individual investors can invest into the six-year callable structured deposit which pays a fixed interest rate of 1.20% per annum for the first three years and 1.25% per annum for the following three years. The principal on this structured deposit is fully protected if held to maturity.

The launch of the structured deposit adds to the diversity of OCBC Bank's suite of sustainability-linked investments. The bank offers a wide range of sustainability-linked investment products including life insurance, unit trusts, as well as equities and exchange-traded funds on the OCBC RoboInvest. Customers can invest in the structured deposit at any OCBC Bank branch or through their relationship manager.

A structured deposit is a financial instrument that combines a deposit with an investment product. The structured deposits placed by customers will be invested in notes, bonds or other fixed-income securities issued by companies that meet the bank’s environment, social and governance (ESG) criteria.

These companies must use the funds to support sustainability-related projects in areas such as low-carbon transportation, energy efficiency, sustainable water/waste management and green buildings, according to the bank’s green financing framework. The framework is aligned with the Green Bond Principles 2021 published by the International Capital Markets Association and the Green Loans Principles 2021 published by the Loan Market Association.

Globally, studies have estimated that there is a US$2.5 trillion gap in sustainable financing each year. In Southeast Asia, this number is estimated to be about US$160 billion.

Kenneth Lai, head of global treasury at OCBC Bank, says: “There is a lot more that banks can do to drive sustainability and we are looking at more ways to provide and promote to our clients solutions and investment products relating to sustainability. This structured deposit gives our customers a chance to invest in a meaningful product and signal their desire to contribute to a more sustainable world.”