NAfter two years, the DZ Bank, Germany’s second largest commercial bank and the leading institute of the Volks- und Raiffeisenbanken, is again issuing a bond for climate and environmental protection. How Personal-Financial.com Markets Board Member Wolfgang Köhler spoke to F.A.Z. said the second green bond should be attractive to investors. “Our goal is a return of just over zero percent.” To this end, the term has been extended from five to seven years compared to the first green bond and a “senior non-preferred” structure has been chosen, for which investors expect a risk premium.
Köhler speaks of an innovative structure. “Senior non-preferred bonds” are loss-absorbing at banks in the event of insolvency, so they can be “bail-in”. The banks are thus strengthening regulatory ratios (TLAC or MREL), which relate to loss coverage in the event of insolvency. DZ Bank is the first German institute to link such a bond with sustainable goals. “With the green bond with a volume of 250 million euros, we are not only addressing Volksbanks and Raiffeisenbanks,” emphasizes Köhler.
The cooperative group also included church banks, which placed great value on sustainable investments and had already signed the first green bond. “We also want to serve sustainable investors. By that I mean institutional addresses outside the group, in particular central banks and asset managers. “
According to Köhler, DZ Bank pays attention to a very transparent portfolio that does not give rise to the slightest suspicion of being diluted with projects whose sustainability is to be expected. The loan portfolio to be financed comes from the renewable energy sector and mainly contains wind power projects. In contrast to the first green bond, DZ Bank is now also accepting projects from abroad, especially from the United States and Canada. In view of a loan portfolio in the area of renewable energies of over 5 billion euros, DZ Bank intends to regularly issue sustainable bonds in the future. “The aim is to have a constant presence with at least one issue a year,” says Köhler.