LBBW (Landesbank Baden-Württemberg): Best Green Bond Issuer Germany 2018 & Best ESG Banking Team Germany 2018
Best Green Bond Issuer Germany 2018
Landesbank Baden-Württemberg (LBBW) in June debuted its first-ever green pfandbrief – a uniquely German bond that is backed up by mortgages and invests the proceeds in other financial instruments. The €500m five-year issue is lead managed by LBBW and a number of tier-1 European banks such as ABN Amro, UBS, and Swedbank. The bond complies with the issuer’s green framework and with the Green Bond Principles as formulated by the International Capital Market Association (ICMA). In a testament to LBBW’s placement power and product expertise, as well as the trust the bank inspires amongst both domestic and European investors, the pfandbrief was oversubscribed well over three times in just two hours.
Late last year, LBBW successfully placed its first green bond issue – at €750m the largest of its kind issued by a European bank. That four-year issue caught the market’s attention for carrying the tightest spread of any senior German benchmark. LBBW thus demonstrated that it can launch bonds based on a new asset eligibility methodology which is significantly stricter than mere sustainability criteria.
Though LBBW was the third German bank to enter the green bond market, it has since managed to establish a lead over the competition. The bank proactively encourages investors to green their portfolios. Green bonds also allow LBBW to tap into a new investor base and, crucially, keep in close touch with market trends and sentiments.
Through its green bonds, LBBW has also been able to broaden its horizon. Whilst the bank has always enjoyed the trust of its domestic market, LBBW is now able to leverage its solid reputation outside Germany as well.
The CFI.co judging panel notes that the green bond market is growing at a brisk pace and offers opportunities aplenty as large and small investors alike consider the environmental impact of their funds. The judges are pleased to offer Landesbank Baden-Württemberg the 2018 Best Green Bond Issuer Germany Award.
Best ESG Banking Team Germany 2018
The German Landesbank Baden-Württemberg (LBBW) has managed to take the lead in the move towards green banking, whereby sustainability principles are placed at the very core of all operations and both internal and customer and market-facing processes are re-evaluated for compliance with strict and well-defined ESG (environmental, social, and governance) parameters. Applied to financial services providers, ESG principles and guidelines offer a well-delineated framework that ensures optimum performance for all stakeholders. By mitigating risk across all operations and beyond conventional parameters, corporate top performance and sustainability are ensured.
An outgrow of its ESG leadership, LBBW has enjoyed remarkable success with the bank’s first two green bonds which were both well oversubscribed and excellently received by international sustainable investors. This has whetted LBBW’s appetite for a deeper dive into the green bond market. The bank has assured investors that it will regularly issue new green opportunities using its now fully-operational and experienced platform. In addition, LBBW DCM has lead-managed numerous sustainable bond transactions for reference issuers like KFW, NRW, Berlin Hyp, and DNB. LBBW is, thus, actively promoting the transformation towards a more sustainable banking and helping this evolving market to set new quality standards.
The proceeds of the bonds are earmarked for the financing of renewable energy projects and green commercial buildings, amongst others. LBBW has engaged a specialist building technology consultancy to define and develop a real estate portfolio that meets the highest standards. Only buildings situated amongst the top 15% for carbon efficiency – as certified by the German energy agency Dena – are eligible for inclusion.
By putting its entire operating on a sustainable footing, LBBW has become a model that other banks, including institutions outside Germany, now follow.
The CFI.co judging panel agrees that adherence to solid ESG standards mitigates overall risk to investors and businesses alike. It also makes sense when considering long-term returns. LBBW has demonstrated that green banking meets customer demands and is the only sensible approach when future-proofing a business. The judges declare Landesbank Baden-Württemberg winner of the 2018 Best ESG Banking team Germany Award.
