New analysis uncovers Malaysian banks’ risky and dirty multi-billion-dollar coal finance
20 February 2020
Malaysian banks are the target of an international climate campaign on their proposed funding to a new Indonesian coal power station after new data revealed CIMB, Maybank and RHB provided US$4.9 billion in finance to the coal sector between 2010 and 2019.
The lending to polluting power stands in stark contrast to announcements from Bank Negara Malaysia, Malaysia’s Central Bank, which has repeatedly highlighted the critical importance of financial institutions managing climate risk.
The data reveals that CIMB is the worst offender, pouring approximately US$2.7 billion into coal power. Maybank invested nearly US$1.8 billion into coal, while RHB provided US$435 million.
|CIMB, Maybank and RHB’s lending to coal power and renewable energy* from 2010 to 2019|
|Bank||Sector||Bond arrangement (US$m)||Lending (US$m)||Total (US$m)|
This coal finance shows little signs of abating given that CIMB and Maybank are considering funding 2000MW Jawa 9 and 10 plant in Indonesia, which is currently aiming to reach financial close. This project threatens to generate further air pollution in Indonesia and harm the health and livelihoods of local communities. Other banks, such as Standard Chartered, may have stepped away from the potential deal due to climate commitments.
Malaysian civil society organisations have now addressed a letter to CIMB and Maybank calling for an end to the consideration of the controversial Jawa 9 and 10 coal power plant, urging the banks to create new policies to end coal finance and facilitate a rapid transition to renewable energy. International organisations are also urging the banks to do the same.
Worryingly, Malaysian banks are missing a global trend, with over 110 financial institutions having already implemented policies to restrict or end coal finance. Last year, all three large Singaporean banks, UOB, DBS and OCBC, announced new policies to end coal finance.
“As major financial institutions rush to withdraw from coal across Asia, concerned about the financial risks of exposure to coal, Malaysian banks appear to be catching a falling knife,” said Bernadette Maheandiran, Legal Analyst for Australia-based finance group Market Forces.
“CIMB, Maybank and RHB have somehow failed to hear Bank Negara Malaysia’s calls for financial institutions to support the transition to clean energy. In doing so they are exposing themselves to a major financial risk by backing the last dregs of a dying coal industry, whilst also pouring billions into driving climate change.”
“Climate change is a huge threat to our lives and livelihoods,” said Nithi Nesadurai, President, Environmental Protection Society Malaysia and the regional coordinator of the Climate Action Network, Southeast Asia. “Our banks should be supporting the transition to clean air and clean energy rather than investing billions in worsening the crisis.”
“Our own Central Bank has recognised the risk, as have over a hundred other financial institutions which have seen the writing on the wall for coal and are investing in a future powered by renewable energy. Malaysian banks should commit to end coal finance now.”
The research on CIMB, Maybank and RHB is available on Market Forces’ website.