Is globalization reversing? Will US tariffs derail global trade? Is the world splintering into geopolitical trade blocs? Answers to these questions will now come faster—if not in real time, then at least quarterly—due to the new DHL Global Connectedness Tracker.

Unveiled on Tuesday by global logistics and shipping company DHL and New York University’s Stern School of Business, this web-based platform features interactive charts that track globalization levels and trends worldwide.

Some recent findings may come as a surprise: Global “connectedness,” measured across trade, capital, information, and people flows, remains robust as of mid-2024, despite geopolitical turbulence. The Tracker shows resilience in international flows even amid wars in the Middle East and Ukraine, immigration pressures, bottlenecks in the Panama and Suez Canals, and an ongoing US-China trade war.

This attests to “the resilience of international flows in the face of geopolitical tensions and uncertainty,” Global Connectedness Tracker reports.

“Currently available data indicate a stable level of globalization in 2024, with the balance of international relative to domestic activity,” Steven Altman, a Senior Research Scholar and Research Assistant Professor at the NYU Stern School of Business, and lead author of the Tracker and its affiliated DHL Global Connectedness Report, tells Global Finance. That is, it is holding roughly steady around the record high level set in 2022.

The Tracker scales globalization from 0% (no cross-border flows) to 100% (frictionless trade, with no border or distance effects). Projections for 2024 suggest little change across its four main categories, Altman adds.

How does one square this with all the turmoil in the world? “We might be focusing too much on the largest countries and economies. Many see the US and China interacting less, Europe and Russia decoupling, and the UK leaving the EU as signs of ‘the end’ of globalization,” says Tobias Meyer, CEO at the DHL Group, in the report’s introduction.

Still, maybe the election of Donald Trump in the US will change things? Trump has proposed tariff increases across all trade partners and especially large tariff increases on China.

If these tariffs are implemented, “they would put negative pressure on all US imports and exports, because trade partners are sure to retaliate,” answers Altman. “This implies especially great pressure on the 2.6% of world goods trade that takes place directly between the US and China, and some pressure more broadly on the 22% of all goods trade that is to or from the US,” i.e., 13% of world imports and 9% of exports.

Elsewhere, countries that are neither close allies of the US nor of China grew their share of world trade from 42% in 2016 to 47% in 2024, according to the Tracker, with the United Arab Emirates, India, Vietnam, Brazil, and Mexico seeing especially large trade share gains over this period.

Put another way, the vast majority of trade does not directly touch the US. “So what matters most for the global level of trade integration is whether a potential US-led escalation of trade barriers spreads further and begins to constrain trade between other countries,” Altman says.

He doesn’t foresee most countries retreating from cross-border trading. For one thing, most international trade is already between countries that are friends. Also, smaller countries, as a rule, are more dependent on trade than larger countries. “The US is actually the major advanced economy that relies the least on imports,” i.e., has the lowest imports-to-GDP ratio, says Altman. 

Nor is there much evidence yet that cross-border trade is becoming regionalized. Countries continue to trade with other countries far, far away. During the first seven months of 2024, “goods trade traversed the longest average distance on record (4,970 km),” according to the Tracker.

There is some evidence that trade between rival geopolitical blocs (e.g., US allies v. China allies) may be diminishing, however, mainly because of Russia’s international flows. According to the Tracker:

“The share of world trade crossing between close allies of the US and China and the opposing bloc fell from 13% in 2016 to 10% in 2024, but excluding Russia only from 11% to 10%.”

What about the longer-term prognosis—beyond the next decade or two: Should one expect globalization to grow, retract, or remain about where it is today?

“I think the most likely scenario is that we will see modest increases in globalization,” says Altman. Globalization often advances by fits and starts, with temporary reversals, but the long-range trend is positive.

That said, “we’re still far from a ‘flat’ world and I don’t think we’ll come anywhere close to complete or unfettered globalization in the coming decades,” he adds.

The current “depth,” or connectedness on the Tracker’s scale (i.e., 0% to 100%) is 25%, where 0% would mean that no flows cross borders at all, while 100% means that borders, distance, and cross-country differences have ceased to matter, and interactions are just as likely to happen between countries as they are within them.

This means that most of the overall business conducted around the world is still overwhelmingly domestic.

“And it’s going to stay that way because people and companies naturally tend to have stronger roots at home, and very few manage to achieve equal levels of success all around the world,” he comments.

While the Tracker is highly unlikely to reach 100%, “I wouldn’t be surprised if we eventually get from 25% up to 30% or maybe even, perhaps several decades into the future, up to 35%,” Altman says. 

Banks face an uphill battle as supply chains remain disrupted, regional conflicts continue to build, and the fear of bank failure returns. Despite this, select financial institutions have threaded the needle and delivered stellar performances to their clients and shareholders over the past year.

JPMorgan Chase takes the top honor as Global Finance’s World’s Best Bank for 2024, as well as the World’s Best Investment Bank and World’s Best Private Bank. The global giant won its laurels thanks to a broad range of client offerings and solid financials while helping to arrest a series of US bank failures with its acquisition of First Republic Bank. Industry leadership, advancements in digitalization and corporate citizenship also factored in.

Throughout 2023, JPMorgan Chase raised $2.3 trillion in extended credit and new capital for its consumer and institutional clients while moving $10 trillion in over 120 currencies daily. For its 6.4 million small-business clients, the bank broadened its suite of payment acceptance offerings, including invoicing and a tap-to-pay option allowing merchants to accept card payments via their mobile devices.

The world dodged a global recession in 2023 as global output growth shrank to 3.3% from 3.5% in 2022, according to the International Monetary Fund’s July World Economic Outlook 2024. Advanced economies, the Middle East and Central Asia and Sub-Saharan Africa suffered dips in growth ranging from 0.9% to 3.4%. Only the emerging and developing economies in Europe and Asia experienced growth, their respective outputs growing by 2% and 0.3%. However, after 12 months of monetary tightening, the global economy is projected to grow 3.2% in 2024 and 3.3% in 2025 as long as inflation remains in check, according to the report’s authors.

The high-profile failure in March 2023 of the regional Silicon Valley Bank (SVB), which relied heavily on uninsured deposits, had many banks checking the models they use to determine asset correlations to which they might be exposed. SVB’s collapse quickly spread to Signature Bank and First Republic Bank, which shared similar characteristics, leading to the second-, third- and fourth-largest bank failures in US history.

The banks “failed as a result of a combination of unrealized interest rate losses from their long-term, fixed-rate assets and the loss of the low-rate deposits that had funded these assets,” Larry Wall, research center executive director of the Atlanta Fed’s Center for Financial Innovation and Stability, explained in a blog post. “Longtime observers of the financial system will see a parallel with the 1980s thrift debacle, in which approximately 1,300 savings and loans and savings banks failed, due in large part to their exposure to interest rate risk and their loss of the low-rate deposits that had been used to fund these assets.”

This time, the failures disproportionally affected the venture capital-backed tech startup sector that these banks catered to. In a letter to UK Chancellor of the Exchequer Jeremy Hunt, the leaders of 180 tech companies said, “The loss of deposits has the potential to cripple the sector and send the ecosystem back 20 years.

The US Federal Deposit Insurance Corporation’s quick response to the banks’ failures stemmed additional contagion and has left businesses with an object lesson in concentration risk.

Along with the World’s Best Bank, global honors this year include awards for Best Corporate Bank, Best Consumer Bank, Best Banks Worldwide in Emerging and Frontier Markets and Best Sub-Custodian Bank. All are being announced here for the first time. Previously announced honors include Best Global Transaction Bank, Best Bank for Sustainable Finance, Best Islamic Financial Institution, Best Investment Bank, Best Cash Management Bank, Best Trade-Finance providers, Best Supply Chain Finance providers, Best Foreign Exchange Provider, Best Private Bank, and Best SME Bank.         —Robert Daly

The editors of Global Finance, with input from industry analysts, corporate executives and technology experts, selected the global winners for the World’s Best Banks 2024 using information provided by entrants as well as independent research based on objective and subjective factors.

Entries are not required, but experience shows that the information supplied in an entry can increase the chance of success. In many cases, entrants present details that may not be readily available to the editors.

Judges considered performance from January 1 to December 31, 2023. Global Finance applies a proprietary algorithm to shorten the list of contenders and arrive at a numerical score, with 100 signifying perfection. The algorithm weights a range of criteria for relative importance, including knowledge of the sector, market conditions and customer needs, financial strength and safety, strategic relationships and governance, capital investment and innovation, scope of global coverage, size and experience of staff, risk management, range of products and services and use of technology. The panel tends to favor private-sector banks over government-owned institutions.

The winners are those banks and providers that best serve the specialized needs of corporations engaged in global business.

In 2023, JPMorgan Chase not only managed to grow its business lines, maintain its fortress balance sheet and continue innovating, but also helped stabilize the US financial system. After last year’s collapse of First Republic Bank, the second-largest bank failure in US history, which followed the high-profile failures of Silicon Valley Bank and Signature Bank, JPMorgan stepped in to acquire a substantial majority of First Republic’s assets for $10.6 billion. The transaction netted JPMorgan approximately $173 billion in loans, $92 billion in deposits, and $30 billion in securities.

Outside that acquisition, the bank generated a net income of roughly $49.6 billion, up about 32% year-on-year, from revenue of approximately $158.1 billion, with solid performances from most business lines. Corporate & Investment Bank, rebranded as Commercial and Investment Bank in January 2024, contributed a net income of $14 billion from $49 billion in revenue. Its Consumer & Community Banking business added a substantial amount of retail branches and advisers and leads the First Republic integration. The Commercial Banking business more than doubled its new client relationships, while the Asset & Wealth Management business increased client assets under management to $5 trillion from $4 trillion the previous year.

JPMorgan also invested significantly in artificial intelligence and machine learning, identifying 400 instances where the technology can improve fraud detection. The bank also minted a Chief Data & Analytics Office,r who has a seat on its Operating Committee and approved adding four new data centers to its existing 32 facilities. Furthermore, the bank has increased its adoption of cloud computing by having 70% of its applications in the cloud, up from 50% in 2022, and 75% of its data stored in the cloud, up from 70% the previous year.   —Robert Daly

Chairman & CEO — Jamie Dimon

https://www.jpmorganchase.com

Despite the global economy dealing with rising inflation, trade conflicts and bank failures, BBVA returned as the World’s Best Corporate Bank award winner for a second year. The bank’s Corporate and Business Banking (CBB) unit contributed €2.25 billion ($2.48 billion) in net attributable profit, a 44.5% year-on-year increase. Geographically, its operations in Mexico and Turkey contributed the most (29% each), while its operations in Spain, South America and the rest of the business contributed 15%, 13% and 15%, respectively. Driving the growth was a 16% increase in net fees and commissions across all businesses.

CBB also saw its cross-border business grow by more than 30% in 2023, fueled by nearshoring operations in Mexico, the US and Asia. The cross-border activity represented over 35% of CBB’s activity for the year.

Wholesale banking cannot be discussed without mentioning sustainability, as the two are tightly intertwined at BBVA. The bank is known for developing inaugural and subsequent green and social bonds for the European and Latin American markets. However, BBVA has expanded its sustainable offerings and created a global unit providing financing for clean technology like hydrogen and biofuels, energy storage, mobility, and carbon-capture technologies; advisory services that evaluate and classify suppliers based on sustainable criteria and the staff’s specialized expertise; and consultation tools like carbon footprint calculators.   —RD

Global Head of Sustainability and Corporate & Investment Banking — Javier Rodríguez Soler

https://www.bbva.com/

Investing in high-growth banking sectors like consumer banking and taking a digital-first approach has paid off handsomely for Standard Chartered, the year’s winner of the World’s Best Consumer Bank award.

The bank’s Consumer, Private & Business Banking unit contributed $2.49 billion in pre-tax underlying profit while increasing its mass retail client base to 9.5 million clients, a million more than the previous year. At the same time, retail product income increased by 26%, and deposit income grew by 74%.

The bank’s digital strategy enables it to provide more personalized, relevant, real-time product offerings and sharpens its onboarding and engagement capabilities. As a result, the percentage of digital sales grew to 56%, up 8% from the previous year.

The bank continues working internally to grow its mass retailbusiness by scaling sustainability through partnerships, digital client engagements and automation. Standard Chartered has eight such mass retail partnerships in production across China, Indonesia and Singapore that serve more than 2.6 million clients. One such partnership is with Singapore’s all-digital Trust Bank, backed by Standard Chartered and grocery retailer FairPrice Group. Since its founding in September 2022, Trust Bank has grown to become the fourth-largest retail bank in the city-state, with a 12% market share, 700,000 clients, and $1.4 billion in deposits.   —RD

CEO, Wealth and Retail Banking — Judy Hsu

https://www.sc.com

Qatar National Bank (QNB) won the World’s Best Emerging Markets Bank award for its growth, digitalization efforts and expansion in emerging markets. In 2023, the bank grew its net profit by 8% to 15.5 billion Qatari riyals ($4.25 billion) while increasing its deposits by 2% to 857 billion riyals and loans by 853 billion riyals.

The bank, which operates in 28 countries on three continents, has taken a cross-pollination approach to digitalization by leveraging intellectual property and technology developed throughout its organization. A prime example is QNB’s digital bank, Enpara. Founded in Turkey in 2012 and recently gaining approval to become a deposit bank, it caters to small and midsize enterprises (SMEs) and retail clients. The experience in delivering products such as deposits, accounts, cards, facilities, transfers and payments helped develop and launch QNB Bebasata digital bank in Egypt, a subsidiary of QNB Alahli, in March 2023. Since going live, the new digital bank ended the year with 20,000 clients.

QNB is also awaiting approval from Saudi bank regulators to launch a digital-only bank in partnership with Ajlan & Bros Holding, targeting SME and consumer clientele. Meanwhile, the bank expanded its presence in Saudi Arabia by opening its second branch in Jeddah. It opened its first branch in the capital, Riyadh, in 2017.

Aside from technology, QNB aims to attract new deposits and grow its wealth management business in its Indonesian operations by offering new products, such as mutual funds, bancassurance and government bonds, which are offered in other markets under the QNB First luxury brand.       —RD

Group CEO — Abdulla Mubarak Al-Khalifa

https://www.qnb.com

Serving over 25 million corporate, commercial and consumer clients across 20 sub-Saharan countries, United Bank for Africa (UBA) has won the World’s Best Frontier Markets award for its service and performance in some of the fastest-growing markets worldwide.

Through its prudent lending approach, robust risk management, and geographic diversification, the bank nearly doubled its deposits to 17.36 trillion Nigerian naira ($10.82 billion) in 2023 from 8.99 trillion naira in 2022. Over the same period, it grew its loan book by 61% to 5.55 trillion naira. As a result, its pre-tax profits rose 277.2% to 757.7 billion naira.

UBA provides micro, small and midsize enterprise financing to approximately 32,000 SME clients, a 45% increase from the previous year. It also provides access to more than 1,000 branches, a network of 2,676 ATMs and roughly 300,000 point-of-sale machines.

To spur regional growth, the bank has pledged up to $6 billion in financing in partnership with the Africa Continental Free Trade Area (AfCFTA) over the next three years to empower SMEs across the continent. It was also one of six African banks that signed a memorandum of understanding with the Pan-African Payment Settlement System (PAPSS) to further growth in trade.

UBA has also implemented “smart automation,” such as robotic process automation and artificial intelligence, to reduce costs, improve productivity and minimize errors. Several more examples are in development.            —RD

Group Managing Director/CEO  — Oliver Alawuba

https://www.ubagroup.com

With deep resources and outstanding post-trade capabilities, CIBC Mellon is again recognized as the Best Sub-Custodian Bank award winner. In addition to custody, CIBC Mellon’s investment-servicing solutions also provide clients with multicurrency accounting, fund administration, recordkeeping, pension services, securities-lending services, foreign exchange settlement, and treasury services. Scale and automation are critical elements for a sub-custodian to deliver efficiency and security in the settlement process.

CIBC Mellon continues to refine its business model by leveraging the most advanced technology. As the product of a 50/50 joint venture between BNY Mellon’s and CIBC, significant resources are available that contribute to infrastructure and process enhancements for the automation and standardization of services.

One example is CIBC Mellon’s adoption of BNY’s Nexen digital information-delivery platform, which uses data analytics services to help clients by giving faster, real-time cash position and activity reporting through an improved interface for easier access from any mobile device. The firm continues to bring BNY’s technological advancements into global custody by using trade analytics to reduce the impact of trades that settle late. As millions of trades are settled each month, there are significant costs associated with late settlement. To help determine the probability of a trade settling late, CIBC Mellon uses a predictive AI engine, thus increasing market efficiency and cost savings for clients.

Leveraging data analytics is a priority. CIBC Mellon’s recently announced strategic collaboration with Duco, a leading software-as-a-service provider of AI-powered data automation, will contribute to lowering operational risk and streamlining processes for greater efficiency.   —David Sanders

CEO — Mal Cullen

https://www.cibcmellon.com/

Bank of America (BofA), our award winner as Best Bank for Transaction Banking and Best Bank for Collections, works closely with large global organizations that have accounts in multiple currencies, helping them to create liquidity strategies to optimize working capital and weather unpredictable market dynamics. According to Mark Monaco, head of Global Transaction Services, it involves bringing awareness of BofA’s existing solutions, built over the years, and then proactively advising clients on which ones address the various challenges they may face, such as forecasting, increasing costs, and the need to optimize return on cash. “Many corporates have limited experience dealing with uncertainty, especially when combined with very high interest rates, and are unsure how to plan or adjust,” says Monaco. “Some may lack the appropriate treasury management solutions or may not know how to maximize liquidity process efficiency.”

Higher interest rates make unplanned funding shortfalls more expensive, he adds. “These shortfalls are more likely if a company has not fully automated its processes. Resistance to making operational investments when interest rates are high results in many companies looking to cut costs and becoming hesitant to make substantial investments in treasury management solutions.”

As rates change, treasurers may be unsure about how to continue optimizing the value of cash balances and may fall back on “safe” approaches that may not be flexible enough to keep up with the changing economic environment.

Monaco says that in addition to rising rates, high inflation increases the cost of goods and services, eating into liquidity and cash reserves.

“Another factor impacting the delivery of treasury and cash management solutions is the rapidly changing regulatory environment,” adds Monaco. “Across the world, markets are facing new compliance obligations spurred by developments in real-time payments schemes, AML/KYC [anti-money-laundering and know-your-customer measures], cyber threats, sanctions compliance, and data sharing and localization. Companies and their partner banks are having to enhance and improve both infrastructure and processes as a result.”

BofA brought all payments activities under a new Global Payments Solutions division in recognition of the strategic importance of payments to the bank.     —Gilly Wright

Head of Global Transaction Services — Mark Monaco

https://www.bankofamerica.com

Societe Generale (SocGen) bolstered its reputation for sustainable finance innovation in November when it served as sole manager of the first digital green bond ever issued. The €10 million senior preferred unsecured bond was tokenized and directly registered by SG-Forge on the ethereum public blockchain. Blockchain, says SocGen, can potentially increase the traceability and transparency of ESG-related bonds for both issuers and investors.

SocGen also stands out for its reach and versatility. Last year, it was active in ESG projects on all six inhabited continents, including many parts of Africa, and it remains one of the few commercial banks that has ever issued green, social and sustainable bonds, according to Natixis.

In the project finance sphere, the bank was active on many fronts in 2023, including in October as sole debt financial adviser and mandated lead arranger on Automotive Energy Supply Corporation’s €873 million battery storage factory in France’s Battery Valley. Elsewhere, it helped finance offshore wind projects in Poland and South Korea; onshore renewables in Japan, Australia, Egypt and Vietnam; and critical materials projects in Mongolia and Africa.        —Andrew Singer

Global Head of Sustainable and Positive Impact Finance Solutions — Eric Bonnin

https://www.societegenerale.com/

Kuwait Finance House (KFH) earned its recognition as Best Islamic Financial Institution worldwide thanks to innovation in Islamic financing, a wide geographical footprint and strong operations. KFH is the second-largest Islamic bank globally, providing services to customers in the Middle East, Asia and Europe through extensive distribution channels. It has subsidiaries in Kuwait, Turkey, Egypt, Bahrain, Iraq, Malaysia, the UK and Germany.

Last year was KFH’s first full year of integration following its 2022 acquisition of Ahli United Bank of Bahrain. Total assets stood at 37.87 billion Kuwaiti dinars at the end of 2023, as net profit jumped to 672 million dinars from 428 million dinars, for a return on average assets of 1.8%. The firm’s overall financial profile is solid, supported by good capitalization and liquidity. Its Islamic banking products and services cover commercial, retail and corporate banking as well as real estate, trade finance and investments.

During 2023, KFH launched Tam Digital Bank, Kuwait’s first Shariah-compliant digital bank. It was also at the forefront in launching several digital services, including detecting biometric facial features in branches, instant printing for all types of cards, its Zaheb digital platform and KFHonline for corporates, digital portfolios to facilitate e-payment and a D-POS device for instant opening of bank accounts.   —Darren Stubing

CEO — Abdulwahab Iesa Alrushood

https://www.kfh.com

With a highly skilled team of investment bankers, J.P. Morgan remains undeterred in the face of geopolitical turmoil to provide exceptional investment banking solutions. In 2023 when, according to Dealogic, global investment banking fees for the industry fell 16% to $66.5 billion, J.P. Morgan was able to retain its top position in global investment banking revenue, capturing an 8.7% revenue market share. Regionally, the bank retained the top spot in Europe, the Middle East and Africa. In the Asia-Pacific region, apart from Japan, the bank rose to be top fee earner from the fourth position, year-over-year, with improved performance in Southeast Asia, South Korea, India, Malaysia, Singapore and Australasia. This success is the result of a deep and talented team of bankers. J.P. Morgan recognizes the importance of developing its staff by rotating senior management to broaden their roles. The firm recently announced new and increased responsibilities for some key executives to position the investment bank for future success and growth. —DS

Co-CEOs, Commercial & Investment Bank — Jennifer Piepszak and Troy Rohrbaugh

https://www.jpmorgan.com/

Citi, our winner as Best Bank for Cash Management, recently combined Treasury and Trade Solutions and Securities Services under one umbrella. At the June Citi 2024 Services Investor Day, Shahmir Khaliq, head of Services, noted that “it made sense to bring these businesses together under one portfolio, as they have strong synergies across our entire institutional client base.”

“Our clients are looking for fully integrated solutions across the entire continuum of accept, hold, pay and finance as they look to scale quickly and globally,” added Debopama Sen, head of Payments at Citi, at the time. She added that acceptance capabilities are powered by Spring by Citi, an end-to-end digital payment acceptance solution. Hold capabilities include integrated liquidity and a banking-as-a-service offering that allows e-commerce clients to serve their merchants and seller customers. Payment solutions then enable clients to manage payouts globally, including navigation of cross-border complexities. And finally, Sen pointed out that for finance, Citi offers tailored offerings for e-commerce businesses, including the ability to offer flexible financing options and working capital management solutions.        —GW

Head of Services — Shamir Khaliq

https://www.citigroup.com/

With comprehensive trade outsourcing services, BNY Mellon is the bank of choice for other financial institutions looking to avoid high costs without losing trade finance customers. To limit compliance costs, for example, many financial institutions worldwide have restricted the number of Swift’s Relationship Management Application (RMA) exchanges they maintain with their correspondent banks. BNY Mellon developed RMA as a service to help banks route their Swift MT 700 letter of credit messages directly to the beneficiaries’ banks, using BNY Mellon as an intermediary bank for their letter of credit activity.

A multibank supply chain finance program that includes collaboration with fintechs ensures cash optimization for corporate buyers and supports the working capital needs of their suppliers.             —GW

Managing Director and Global Head, Trade Finance Product & Portfolio Group Manager — Joon Kim

https://www.bny.com

Present in over 90 countries, Citi’s supply chain finance (SCF) network supports over 4,000 buyers and 95,000 suppliers. In business for almost 20 years, Citi Supplier Finance’s offering includes digital platforms that streamline processes, seamless technical implementation that is adaptable to various enterprise resource planning (ERP) systems, and effortless electronic onboarding of suppliers. Recent additions include Citi Dynamic Discounting, which enables cash-rich clients to invest excess liquidity directly into their supply chain and provides liquidity to small and midsize suppliers to improve cash flow. Citi provides a single platform and file transmission for both SCF and dynamic discounting. For suppliers, Citi Supplier Finance offers an app that selects receivables to be discounted via mobile phone.     —GW

Managing Director, Head of Trade and Working Capital Solutions — Chris Cox

https://www.citigroup.com/

Last year was nothing short of historic for our Best Global Foreign Exchange Bank, UBS. Between the takeover of its longtime rival, Credit Suisse, in what analysts call the most important banking M&A in history, and the substantial growth of its foreign exchange (FX) operation in developing markets, the behemoth bank has done it all with unrivaled excellence.

The takeover of its rival’s operation led to substantial growth in clientele and traded volume in European markets, resulting in solid profitability growth. It also led to key additions to UBS’ FX team, further expanding the bank’s knowledge.

At the same time, UBS teams in Asia, the Middle East,and Latin America have kept working relentlessly to improve the bank’s digital offering for emerging market currencies.

As a result of this unmatched year, the Swiss-based giant now ranks as one of the largest private wealth managers in the world, with undisputed market share in Europe. It has also watched its emerging markets FX operation expand into one of the world’s largest, expanding the bank’s offerings to its clients worldwide.

Among the bank’s most significant global technological breakthroughs is UBS’ FX Engine Room, with which the bank can place all analytics in one place for use by its global sales force, thus broadening the footprint of its operations to clients looking to trade currencies on a global scale. —Thomas Monteiro

Group CEO — Sergio Ermotti

https://www.ubs.com

This year’s volatile macroeconomic backdrop did not phase our back-to-back award winner, J.P. Morgan. The global behemoth seized the opportunities that volatility afforded, posting phenomenal growth.

With an increasing focus on high-end clients, JPMorgan Chase’s wealth management division grew its net income an impressive 36% year-on-year (YoY) in the first quarter of 2023, 22% in the second, and 16% in the third. A key driver was JPMorgan Chase’s acquisition of failing First Republic Bank in May 2023, a move that calmed the threat of a deeper crisis in the US banking industry.

Moreover, J.P. Morgan Private Bank kept improving its offerings and global presence. This year, it opened a new US Family Office Practice and added to its teams in Asia and Latin America, while making changes in upper management in both regions.          —TM

CEO — David Frame

https://privatebank.jpmorgan.com

For the second year running, the Brazilian digital bank BTG Pactual Empresas has swept the Best SME Bank awards for Brazil, Latin America and the world. The bank has eased access to capital for micro, small, and midsize enterprises (MSMEs), representing approximately 90% of Brazilian companies.

Clients get a low-touch digital channel, available 24/7, that nevertheless provides a high-touch experience using open banking standards and Brazil’s PIX instant payment system. For example, BTG Pactual Empresas has shortened the time needed to obtain credit to about 30 minutes for clients participating in rural credit programs, solar-power and green financing, and women-owned businesses. Newly opened SME accounts are operable within an hour.

Once an SME account is open, account owners can export their banking data to standard spreadsheets, Microsoft Excel and Google Sheets, and enterprise resource planning (ERP) applications, instantly reconciling accounts in their ERP systems.

BTG Pactual Empresas provides such additional services as single-sign-on multiuser and multi-business accounts, online invoicing, collection management, budgeting capabilities, foreign currency exchange and digital receipts, along with payroll, insurance, and tax and investment services. Clients can reach expert support anytime via chat, email, WhatsApp and toll-free calling.             —RD

CEO — Roberto Sallouti

https://empresas.btgpactual.com

Two recent developments have amplified the significance of this struggle: the war in Ukraine, which has vividly illustrated how AI, particularly in the form of AI-enhanced drones, can be weaponized, underscoring the technology’s lethal potential in modern warfare; and the November 2022 launch of OpenAI’s ChatGPT—a generative AI (GenAI) chatbot that has showcased AI’s capacity to transform nearly every facet of economic and social life.

These advancements have thrust AI into the heart of national security and geopolitical discussions. As the Goldman Sachs Artificial Intelligence blog notes, “While the United States, China, and Russia do not agree on many things, they all acknowledge that AI could reshape the balance of power.” This sentiment is echoed by AI Now, a research institute, which asserts that “AI is now firmly positioned as a critical strategic technology for the geopolitical and economic ambitions of nation-states.”

What makes this AI race particularly compelling is the stark contrast in how the two superpowers approach technological innovation. China’s strategy is characterized by centralized planning, with direct state funding funneling into specific AI projects and the development of national computing centers. In contrast, the US has primarily relied on private enterprises to drive AI advancements, many of which utilize open-source models. Government support in the US has been relatively modest, with few export controls imposed on the industry until recently.

Despite the US’s current leadership in GenAI, Andrew Rogoyski, director of innovation and partnerships at the Surrey Institute for People-Centred Artificial Intelligence at the University of Surrey in Guildford, UK, cautions that this dominance may not be permanent.

“China showed that it is capable of taking a long-term view, something Western nations often struggle to do. This can deliver benefits: China’s increasing dominance of the electric vehicle market, for example,” Rogoyski explains. This long-term strategic thinking could enable China to close the gap and possibly surpass the US in AI capabilities, making the stakes of this rivalry higher than ever.

Assessing the current state of the US-China AI race is challenging, given the classified nature of much AI development, particularly in autonomous weapons systems. However, when it comes to generative AI, experts like Rogoyski generally agree that the US holds the upper hand at present.

“The US maintains its edge today,” affirms Tara Murphy Dougherty, CEO of Govini, a defense-acquisition software company. The US advantage is rooted in its superior talent pool, robust infrastructure, and access to more GPUs (graphics processing units), which are critical for AI projects. Additionally, according to Dougherty, a vibrant private sector, fueled by significant capital investment, is effectively commercializing and refining AI applications.

Yet, this lead isn’t necessarily secure. Govini’s 2024 National Security Scorecard reveals that China has outpaced the US in AI and machine learning (ML) patents every year since 2021, with more than double the US patents granted in 2023 alone. “This is concerning because patents are the seeds of innovation and a leading indicator that we are slipping behind in the race to develop the most powerful AI,” Dougherty warns.

Although Chinese large language model (LLM) developers are still perceived to be a few years behind Microsoft-backed OpenAI, US firms continue to push the frontier, according to Rebecca Arcesati, lead analyst at the Mercator Institute for China Studies in Berlin. She suggests that the gap may persist, or even widen, adding, “China’s main weakness [is] infrastructure, since the most advanced chips needed to train foundation models are made by US firms and subject to export controls.”

Despite this, China continues to invest heavily in government-funded research and development (R&D). However, Xavier Ferràs, associate dean of the Executive MBA program at Esade Business and Law School in Barcelona, Spain, points out that China’s market and economic systems are less efficient in leveraging these investments.

Govini’s Scorecard also highlights that over the past five years, the US government has committed just over $12 billion to AI-related obligations, most of which have gone into R&D. “As a percentage of the total spend on emerging technologies, this is a minuscule amount that would shock most commercial technologists,” Dougherty observes.

Meanwhile, US-developed open-source AI models, like Meta’s Llama 2 and Llama 3, have inadvertently helped Chinese companies narrow the gap by providing existing architectures that can be leveraged. This has led experts like Rogoyski to suggest that US technologies, especially those with strong defense applications, need tighter licensing and protection to prevent exploitation.

Nestor Maslej, research manager at Stanford University’s Institute for Human-Centered Artificial Intelligence, notes that certain US policies, such as chip export controls, have indeed slowed down Chinese AI development to some extent. “That said,” Maslej adds, “the US should continually evaluate what else it might need to do to maintain its pole position.”

China faces its own challenges. Not only does it trail in computer chips, but its strict censorship protocols could eventually lead to data deficits when it comes to developing LLMs. China’s heavily censored internet may prove to be a biased data source for training AI models, for instance. Another potential vulnerability is China’s inability to properly integrate new technology in its economy.

“American analysts and policymakers have substantially overstated China’s ability to diffuse new advances like AI throughout its entire economy,” Jeffrey Ding, assistant professor in the Department of Political Science at George Washington University, says. “For instance, China trails the US in diffusion rates of many digital technologies, such as smart sensors, key industrial software and cloud computing across industrial applications.”

America’s dominance by private enterprise in AI development has given it a key advantage over China.

“Virtually all major industrial AI labs are headquartered in the United States,” adds Maslej. “While China does seem to produce more total research in terms of papers and is leading in patents—accounting for 61.1% of global AI patent origins in 2022—if you look at overall indicators of AI competitiveness, the United States is still clearly ahead.”

Others suggest that focusing on the US-China competition in isolation can be misleading. In the 21st Century, technologies evolve globally, often through cross-border collaboration.

“There is much misconception about Chinese firms simply copying their US competitors or doing something wrong,” Arcesati says.

Using existing building blocks, instead of doing everything from scratch, is the norm in machine learning, she notes. “And there are some valid arguments in favor of keeping model weights open, even though the US government is currently evaluating options for restricting [China’s] access to open-source frontier models on security grounds.”

Indeed, the New York Times ran a story in July suggesting that some US-based AI projects are now using Chinese open-source systems as building blocks. The story cites Stanford University’s Llama 3-V project. Notes the Times, “Rather than Chinese developers building atop US technology, US developers built atop Chinese technology.”

Then, too, Chinese talent remains a vital pipeline feeding the United States’ AI research and industry.

A 2023 study by think tank MacroPolo found that, as of 2022, 57% of “elite” AI researchers worked in the US, compared with only 12% in China. At the same time, China was the country of origin for 26% of elite researchers, versus 28% for the US.

“Within US institutions, researchers of American and Chinese origin (based on undergraduate degrees) comprise 75% of the top-tier AI talent, up from 58% in 2019,” notes the study.

Arcesati notes, “The US has historically excelled at attracting top STEM [science, technology, engineering and math] talent from abroad, while China has struggled to do so. But it’s not unimaginable that, because of bad policies in the West that push Chinese talent away, China gains more ground.”

“One of the key levers in this race is how quickly each nation can upskill its broader workforce and use its existing talent to develop more elite practitioners” Govini’s Dougherty says. “Each expert who leaves the US and builds in China tips the scales.”

With Chinese and US talent so entwined, perhaps it’s premature to speak of an “AI arms race,” says Arcesati. She says parts of both the US government and the tech industry “have actually embraced the rhetoric of an AI arms race, with arguments in favor of slowing down China.” The “China threat” has been used by the tech industry as an argument against more regulation, for instance.

“Of course, some US worries are justified,” she adds. “It did make a lot of sense for the US government to try to prevent US tech firms from contributing to surveillance and military applications of AI by the [Chinese Communist Party].”

The US-China AI rivalry may not be a zero-sum game. Some believe that its spinoffs could boost global GDP much like the space race did in the previous century.

“Many of the key technologies we have today—the internet, processors, GPS—trace their origins to significant US public R&D efforts during the Cold War era,” says Ferràs, adding that disruptive innovation often “is generated at the intersection between the public and private sectors.”

Goldman Sachs economists Joseph Briggs and Devesh Kodnani, write that genAI could add 1.5 percentage points to global productivity growth over a 10-year period and lift global GDP by 7%, or nearly $7 trillion.

Initial productivity gains will come mainly from automation, meaning some industries will be disrupted more than others. Ripest for automation in the US, the Goldman Sachs economists write, are those sectors “with particularly high exposures in administrative (46%) and legal (44%) professions.”

By comparison, they anticipate low disruption in “physically intensive professions such as construction (6%) and maintenance (4%).”

Others worry that the AI race could cause widespread unemployment, especially in poorer countries.

“The way demographic trends are emerging, there is a real danger that a significant proportion of the global population—amounting to more than 35% by 2070 in North and sub-Saharan Africa and in West Asia—is likely to largely miss out on AI’s positive benefits,” says D.K. Srivastava, an economist and chief policy adviser at Ernst & Young India.

AI’s positive impact will be concentrated, initially, “in a limited number of sectors.” These will include financial services, business services (including IT and consulting services, among others), transport and storage, education, retail trade, health and social work, construction, media, post and telecommunications, and pharmaceuticals, predicts Srivastava.

On the plus side, “The next form of AI, artificial general intelligence (AGI), has the potential to reshape financial services,” according to a World Economic Forum blog in January focusing on the likely effects of AGI in Latin America, “especially for underbanked and unbanked populations.” The blog notes that “AI-powered mobile banking apps have already made significant strides in reaching rural and remote communities,” which gives them access to the broader economic pool.

Still, there are no guarantees that everything will work out equitably. “Count me as a pessimist,” comments Arcesati. “I think that AI has tremendous potential to make the world a better place—be it by making it possible to discover new drugs more quickly or by boosting productivity generally.”

“Unfortunately, I also think—and this is a personal view—that a more just and equal world is very unlikely to materialize within the constraints of the current international political economy paradigm.”

In the end, the winner of the AI race may be the party that does the best job in integrating private and public resources, suggests Esade’s Ferràs. The West has more efficient markets, “but it will win the race only if it complements them with very aggressive public R&D policies to keep companies at the technological frontier.”

Europe has yet to define the relationship it wants with China in the AI realm, Arcesati observes, but “China is simply a player too important to be ignored,” whether one is talking about research collaborations, technology imports and exports, or AI governance.

Overall, “governments around the world need to take AI very seriously indeed and stop treating it as ‘just another tech revolution,’” Rogoyski states. “It is potentially the most powerful technology that humankind will ever invent.”

While geopolitical tensions, rising oil prices and financial stress are being felt globally, financial institutions understand that innovation during tough times isn’t just about survival but about positioning for future success. Challenges often reveal new problems to solve, demanding increased focus on finding innovative ways to improve efficiencies. Customers’ changing needs also require a response identifying and addressing these evolving needs. The 2024 Best Innovations alumni have developed problem-solving solutions using existing and cutting-edge technologies to push ahead with new ways to improve user experience and meet future challenges, whether to solve a problem, address a need, or create more value.

Brazil’s Banco Bradesco is using the artificial intelligence (AI) revolution to understand central bank communications better. Its new generative AI tool analyzes and summarizes the minutes and announcements from the Monetary Policy Committee of Brazil’s central bank and the Federal Open Market Committee of the US Federal Reserve. It generates detailed visualizations like time-series graphs almost immediately. Other features include a “Hawk/Dove indicator,” which provides a simplified representation of the direction of the Central Bank of Brazil’s monetary policy.

Bradesco’s resource managers are the tool’s main users. The bank believes it creates analyses and summaries that are faster and more bias-free than traditional analyses. Its use could lead to revenue gains of as high as 4.2 million Brazilian reais (about $818,000) annually, Bradesco projects.       

Helplines have existed for decades. In Central and Eastern Europe, they are often used in the farming sector, where users can ask questions of agricultural engineers. However, providing live experts to answer questions requires expense and time. Users sometimes have to wait hours, even days, for an answer.

Turkey’s DenizBank solved this problem by integrating OpenAI’s ChatGPT services via application programming interface (API) to enhance the efficiency of its “Ask an Engineer” offering. Launched in March 2024, the chatbot is dynamic, meaning it improves the more it is used.     

In Kazakhstan, would-be homeowners often engage in shared-equity construction, a process in which future owners buy shares in a house under construction. One shortcoming is that the actual use of funds isn’t always straightforward.

Eurasian Bank’s AI-based tool allows real-time automated and transparent monitoring of shareholders’ funds during housing construction. This mitigates fraud and discourages inflated costs. Forecast analytics are used to vet changes in the timing of construction and installation work, and the protocol ensures all necessary documents are accessed during the construction process. 

Kapital Bank has been leading the charge in Azerbaijan’s digital transformation, where 50% of its loan sales are now online. Its secret sauce has been facial recognition software spiced with AI chatbots and a new online scoring model that can verify a customer’s identity and assess whether they are qualified for a loan. The service is available 24/7, and a borrower never has to visit a physical branch.

The crypto- and digital-asset market is filled with friction and security risks. However, in 2023, BBVA in Switzerland became the first Tier-1 eurozone bank to provide individual investors custody and trading services for 15 selected cryptocurrencies. It also added tokenization services.

These new capabilities will allow BBVA to meet the needs of its private banking and institutional clients, including fund managers and large companies keen to explore new business opportunities in the digital environment.

The project’s deployment required the collaborative efforts of several bank departments, including business, legal, compliance, engineering, security and IT, as well as outside technology vendors Metaco and Avaloq.

China’s securities depository, China Central Depository & Clearing Co. (CCDC), recently rolled out one of the world’s first public platforms for blockchain-based digital bond issuance. The underlying distributed ledger technology (DLT) ensures data transparency, openness and multiparty verification.

Not only can market risk be better monitored, but market costs can be saved for participants: about $30 million so far, estimates CCDC. By the end of 2023, the blockchain-based digital bond platform was connected to more than 20 representative financial institutions, including the Industrial and Commercial Bank of China, Bank of China, Bank of Communications and China Merchants Bank.     

R3’s Corda is a leading DLT platform for financial services organizations. In October, it powered the first digital bond issuance on Euroclear’s Digital Financial Market Infrastructure.

The bond, issued by the World Bank with Citi acting as issuer agent, raised €100 million (about $108 million) to support the World Bank’s sustainable development activities.

The Corda platform prioritizes privacy, security and interoperability; and it has supported many other DLT projects, including Progmat’s recent tokenized bond project in Japan. 

In December 2022, the First Abu Dhabi Bank launched a white-label treasury management system, delivered as software as a service (SaaS), in collaboration with fintech platform provider ION Group. One of the key features is a pay-as-you-go model that can bundle modules or functionalities depending on client needs and priced accordingly. Additional modules can be activated and made available when needed.

FAB also launched a sustainability-linked current account for businesses to support clients in achieving environmental, social and governance objectives by contributing to sustainable developments, integrated into their everyday cash management and a sustainability-linked supply chain finance offering.   

In 2023, Gulf International Bank began to offer an automated tool to help onboard suppliers electronically to supply chain finance programs. This tool allowed the entire buyer-supplier ecosystem to move away from manual invoice and payment processing to real-time monitoring of invoices, payments and balance tracking.    

The bank’s New Cash Management Program consists of two innovative solutions for corporate customers: the Multi-Currency Optimizer and Virtual Account Management. With the first customers activated at the end of 2023, the program includes the first and only notional cash pooling in Italy, optimizing corporate treasury management for groups of companies with international multicurrency operations, including foreign exchange (FX) and liquidity management.    

TreasurUp has created the first excess-liquidity front end for banks, going live in 2024. It’s designed from the clients’ point of view—bridging the gap between identifying liquidity needs and liquidity products—and ranges from basic trade to advanced optimization. Linked to cash visibility and cash flow forecasting, it gives an accurate starting point but also allows for a dynamic forecast and recommendation on a “best fit” product—from a savings account to fixed income products and even FX swaps, all using the bank’s pricing. Clients can choose from basic triggers to advanced liquidity management, combining multiple products seamlessly into cash positions and forecasts.  

Taiwan’s CTBC Bank has developed an AI-powered protocol designed to thwart customer-level fraud before it is committed. According to the bank, AI Skynet can identify 80% of suspicious accounts 90 days before a scam is reported, reducing fraud cases by 24%. CTBC has been using patented AI technologies to improve credit underwriting, reducing appraisal times by 40%. Its “digital robots” have generated credit scores for all 10.2 million of the bank’s customers.

CTBC Bank has the most ATMs of any organization in Taiwan. With the AI empowerment brought by its AI Skynet project, its ATMs now call the nearest dispatching police office automatically and in real time when a suspicious transaction is detected.

Banks increasingly use face-recognition technology for customer onboarding and electronic know-your-customer (KYC) compliance. However, companies still worry about “face-spoofing attacks,” in which fraudsters use a fake face—such as a photograph, 3D model, or physical mask—to bypass a facial recognition system.

Thailand’s KASIKORN Business-Technology Group has developed computer vision technology to foil such attacks. It uses active and passive “liveness” detections. Indeed, KASIKORN is the only organization in Thailand and the third in Asia to achieve this highest level of ISO accreditation for facial-liveness detection.        

Many of the new reportable fields introduced by the 2024 European Market Infrastructure Regulation Regulatory Fitness Program (EMIR Refit) relate to commodities and energy, and gathering the necessary reference data may prove challenging for many institutions. The new regulations went into effect for the EU on April 29 and will go into effect for the UK on September 30.

Fintech firm SmartStream’s Reference Data Services (RDS) has created a new data management service, EMIR Refit, to help firms comply. It is based on validated reference data gathered from multiple sources and covers exchange-traded derivatives and supporting attributes for listed securities traded over the counter. 

Features include opening foreign currency accounts, cardless cash withdrawals, integration of a digital wallet service, insightful views into spending, the DAwards rewards program, and access to the Rashid virtual assistant. The mobile platform also provides Islamic lifestyle services like checking prayer times, Qibla direction and Athkar, as well as weather forecasts. Families can view and transact using minor accounts. At the same time, cardholders have complete control over their cards. This includes enabling them for international use, managing cash advances and applying for new or replacement cards instantly.        

In a first for Bahrain, the National Bank of Kuwait launched, in June 2022, an enhanced app offering a comprehensive solution—integrating multiple banking products and simplifying the customer’s experience. The user can spend, earn and enjoy rewards without the worry of missing the settlement of outstanding payments.      

Launched in December 2023, QIB Lite is a user-friendly and simplified version of the QIB Mobile App designed for individuals seeking quick and straightforward access to their daily banking needs. It is aimed at low-income earners in Qatar to improve financial inclusion. It consolidates all features and services into one screen, making it easier to navigate and more accessible.          

February 2024 marked the launch of Jeel Weyay, an innovative digital banking experience for children ages 8-14, featuring a creatively designed card and access to their banking application.           

The Omnify API platform is part of Arab Bank’s fully integrated portfolio of digital banking offerings. Arab Bank’s fintech, Acabes, designed the banking-as-a-service (BaaS) API platform for select markets in the Middle East and North Africa. It enables partner companies to embed financial products for their customers while providing customers with the requisite tools to develop integrated and advanced offerings. Omnify also has different APIs that offer financial products like KYC screening, accounts using virtual international bank account numbers, custom virtual and physical credit and debit cards, and various payment capabilities.

Bank Millennium’s new mobile app for business and corporate customers is a user-friendly application that can handle large volumes of data for corporate finance departments. To develop the app, Bank Millennium interviewed customers to understand their organizations and how they use the bank’s solutions. The app provides many features like biometric login, easy management of multiple companies and company accounts, more functionality for domestic and foreign transfers, one-click payment authorization, complete order histories, and quickly generated statements that can be sent via a messaging app.          

Papaya Global’s workforce payments offering is an SaaS platform specially designed for the global workforce. This true end-to-end fintech platform fuses global payroll and cross-border payments into a single process. It delivers payments directly to a worldwide workforce, without bank processing or currency conversion fees. Papaya enables companies to pay an entire workforce, tax authorities and benefits vendors using a single platform. This automated platform supports different types of employment, ensures compliance globally and provides real-time reports on workforce spending. Papaya also integrates human resources and finance data through human capital management and enterprise resource planning systems to create a single source of truth for clients.

Standard Bank’s Smart Nudge supports client engagement by leveraging machine learning and AI to suggest personalized and innovative opportunities for clients, including additional information, products or other relevant content. This business-to-business engine considers the corporate decision-making environment and information across various trading-asset classes, client behavior, and transactional data to develop recommendations. With Smart Nudge, teams can collaborate across business units to expand relationships with clients further. This tool also recalibrates based on interactions and feedback to improve the accuracy of its output and recommendations.

Akbank’s wealth management team introduced a digital portfolio management product accessible through the bank’s Akbank Mobile app. This product simplifies investing for customers and lowers the barriers to entry for investing. The tool streamlines traditional processes and offers products tailored to its customers’ investment objectives. Customers also can access finance professionals who can help manage their portfolios. Users can select a portfolio that aligns with their risk tolerance and financial goals and monitor it on their mobile app while accessing funds at any time. By scaling its offerings, Akbank’s product has lowered the capital requirements and created a fully digital experience.     

Taxpayer refund advance loans are a high-demand product requiring analysis of thousands of documents during specific times of the year. Banco do Brasil’s Digital Compliance project leverages AI technology to create a more efficient process. The model extracts client information from the documents using a neural network and optical character recognition (OCR) services, including name, address, tax paid, bank account and validation codes. The Digital Compliance project saves time by processing millions of records and eliminating human error. The result is a better user experience.

Kuwaiti wealth adviser Markaz unveiled its GCC Momentum fund, the first passive fund to invest across the Gulf Cooperation Council (GCC) markets to provide regional exposure. The fund follows the momentum methodology and holds shares of companies listed in the S&P Momentum GCC Composite Index that have sustained a high momentum score over the past 12 months. This fund capitalizes on the upward trajectory of stock prices by investing in those with the most growth momentum.        

The Apex Structured Liquidity Solution gives institutional and private investors access to private credit and microfinance industries. This low-risk cash management solution offers risk-adjusted returns in US dollars. It provides investors with a predictable fixed-income cash flow without the volatility of mark-to-market adjustments. Through a partnership with FAVO Capital, Apex leverages AI to analyze clients’ live bank accounts, assessing their creditworthiness within two hours. Integrating with client bank accounts ensures more-reliable repayments that result in steady returns for investors.          

The Pulsoo app gives small-business owners a holistic approach to managing financial and regulatory positions. The app, a collaboration between Banco BPI and the Portuguese telecom NOS, is tailored toward small and midsize enterprises (SMEs), sole proprietors, and self-employed professionals. The app can aggregate and initiate payments as well as connect with tax authorities. It can link multiple bank accounts from major Portuguese banks and access a consolidated view that includes balances and transactions. Pulsoo users can transfer funds between accounts, initiate service payments, and process payments for government authorities. Its budgeting functions help companies manage funds, and it provides a preview of upcoming transactions.          

Boubyan Bank recently enhanced the peer-to-peer payment functionality, called ePay, of its SME banking application, so that small businesses can seamlessly manage their payments. With ePay, customers can schedule payments with automatic payment links. The new subscription model works such that customers can settle payments weekly, monthly or annually. They can also send automatic SMS reminders to customers who have not yet paid. And ePay enables customers to pay the links with a debit card, between Boubyan users with a face ID, or a credit card.     

OTP Group’s Naturália is a digital credit offering for the agricultural sector that offers loans based on nonfinancial agricultural information. With more precise data, OTP Group can monitor the industry’s risks and trends and offer more personalized loans to customers. Naturália uses a detailed, transparent and integrated database that maps properties and collateral to provide bespoke loans to customers. The platform also processes requisite loan documents in an automated process that leverages the integration of business process management, robotic process automation, OCR, and many document management systems.       

Nedbank Mozambique reinvented how it services customers with its client-oriented structure for the brand, people, branches, processes and systems. This strategy has been the pillar of Nedbank Mozambique’s success, growth and unique positioning in the market.

Among the arrows in the bank’s quiver is NedSnap, a robotic process automation (RPA) platform that supports Nedbank’s employees by facilitating more-effective communication and timely results. This floating widget provides immediate visual feedback for a more-efficient user experience and enables different bank departments to generate chained tasks for more-seamless and effective operations.

Other tools include Miyo, which is designed to work with ChatGPT. It provides intelligent analysis and insight on business statistics and strategic decision-making. It processes questions in natural language and converts them to structured query language (SQL) queries so that users can access relevant information without navigating complex datasets.

NedDocs is the bank’s software offering that streamlines document analysis and validation with optical character recognition (OCR) technology and a natural-language processing model. This solution integrates with RPA systems to automate document workflows.         

More global banks are screening new clients these days, and one way they do this is by surfing the internet for potential bad news about a would-be customer. It’s usually a tedious, time-consuming process. DBS Bank, however, recently developed a new generative AI (genAI) tool for adverse-news screening that sifts through vast amounts of information rapidly and with heightened accuracy. It has already saved the bank the equivalent of five full-time employees across Singapore and neighboring regions. It has also shortened customer onboarding times and broadened risk coverage.

DBS also unveiled a new AI-based fraud-detection tool in 2023 that couples a high-tech machine learning algorithm with a more traditional rule-based detection engine. This has improved the bank’s precision and its capture rate by 50%.

The bank continues to innovate in the payments sector, too, including a cross-border QR payment linkage launched last year that lets consumers make real-time retail payments between Singapore and Southeast Asian countries by simply scanning the overseas merchants’ QR codes.           

Tatra banka is usually quick to adopt emerging technologies, and this past year was no exception. It became Slovakia’s first bank to offer digital account opening and digital loans to non-clients through a process that relies heavily on biometrics. Launched in May 2023, the new process had onboarded more than 30,000 new users by year end.

The bank encourages its employees to generate new ideas, and they do so—so many that Tatra recently implemented IDEApp. This idea-management platform employs an AI digital assistant to help collect, evaluate, prioritize and report ideas. This enables staff to know who’s doing what and to track an innovation’s stage of development.

The bank also recently developed a tool  to combat voice phishing, or “vishing,” in which fraudsters call consumers demanding important information in the bank’s name. Its anti-vishing protocol uses a push notification sent to a client’s phone with a unique code to prove the agent’s identity.         

In recent years, Banco BTG Pactual developed a digital platform to leverage opportunities in Latin America. BTG Dol is the bank’s entrée into digital assets. This dollar-pegged stablecoin bridges the gap between digital and fiat currencies and is a reserve of value for economies experiencing volatility. BTG has a background in cash and reserve management, and integrating this expertise with blockchain technology has helped elevate BTG Dol as a stablecoin with a higher level of trust and security than existing stablecoins.

BTG is also focused on its environmental solution strategy: first with its impact-oriented reforestation investment strategy in Latin America; and lately, with its minority investment in Systemica, a developer of carbon-reduction projects. With this investment, the bank aims to have a more technical branch to support investments in the carbon markets and environmental assets. Systemica’s CarbonSpore platform provides an online tool that manages and develops carbon-asset generation projects while monitoring deforestation in legal reserves and permanent preserves.

Mashreq’s innovation launches in 2023 were as varied as they are impressive. They included a nonresident platform for digital account opening with an Indian partner bank, allowing Indian customers, and very soon other nationalities, in the United Arab Emirates to open an account from the UAE in less than 10 minutes; a leasing platform for the real estate industry; inclusive wealth management services; an automation platform for trade asset sell down with predictive analytics and machine learning; real-time data-streaming analytics for contextual banking; an agency desk automation solution for syndicated loans; and a carbon-footprint calculator.

The bank also excelled with AI innovations, becoming the first bank in the region to release an integrated AI solution for hyperpersonalized insights to improve client experience and revenue growth by identifying opportunities and threats within portfolios. Corporate banking relationship managers, meanwhile, can benefit from an AI-based transaction deviation and early-warning signal system. —GW

Bank of America (BofA) is a leader in technological and digital innovation. The bank leverages its annual technology investments and corporate culture to support clients’ financial needs through improved user experience and products. As a mark of the bank’s progress, in 2023 its clients had a record 23.4 billion digital interactions, an 11% increase year over year.

BofA enhanced its digital banking platform with CashPro Data Intelligence, combining a client’s historical data with advanced analytics to suggest actionable insights, and benchmarking various areas. CashPro Developer Studio provides a solution for flexible, quick integration with instant issuance of application programming interface (API) sandbox credentials and production access. CashPro Chat enhancements extend the bank’s advanced virtual assistant to commercial clients.

“Client experience is very much front and center of our technology, and CashPro Chat now includes the same proprietary artificial intelligence and machine learning capabilities behind Erica—the company’s virtual financial assistant—so our corporate clients can submit queries and get real-time answers,” says Andrew McKibben, international head of technology at BofA.      

CaixaBank pioneered lifestyle banking before most banks woke up to the need to integrate the banking experience with customers’ lives. The bank made several meaningful improvements throughout 2023 to improve customer journeys. These include a custom-pricing simulator, which provides a first-mortgage offer with a personalized price in real time; an option whereby customers can use the website and the CaixaBankNow app to aggregate and view their pension plans held with other entities; a digitized will-making service; and the instant payment of taxes, rates, and fines via the Spanish mobile payment service Bizum. To ensure it meets customer needs, CaixaBank guarantees that all digital products launched on the market have been tested, iterated and validated by actual customers—minimizing risks and improving the user experience without affecting time to market. CaixiaBank also established a Mobile Experience Lab—where employees can experiment with the market’s newest devices and gadgets and perform specific tests on their applications and those of third parties. 

MNT-Halan developed innovative technology that provides a digital solution for unbanked populations. The resulting products have driven digital engagement, customer retention and market share. The company’s Halan superapp offers remote access to consumers for the entire Halan product and service ecosystem, including small- and micro-business lending, payments, investment products, e-commerce, and consumer finance solutions like savings and buy-now-pay-later products. Housing these services in one app makes financial processes more accessible to underserved communities. Users can receive salaries through the app, transfer funds to other accounts, make investments and purchase items.

Among the company’s offerings is Neuron, a core banking system platform in the Middle East and Africa designed for integration. The API software enables MNT-Halan to connect with various digital banking services that optimize the banking experience. Neuron connects users, merchants, lending agents, and MNT-Halan branches to give customers a more active role in their finances while developing their businesses to achieve financial independence.    

Payment institution Roger (PiR), a fintech based in the Czech Republic, has developed the region’s first service for automated invoice verification. The service targets small and midsize enterprises (SMEs) that rely on factor financing to maintain consistent cash flow.

Verifying invoices’ creditworthiness is critical in factor financing, but it takes time. However, using automation and an online interface, PiR has dramatically shortened the period an SME must wait to be paid—from 60-90 days to just three days.

Each invoice is automatically processed based on electronic data interchange communication. Input data is decomposed into structured code, and the system then transforms it into invoices written to the verify invoices interface and then sent for approval.

SMEs now receive as much as 75% of the value of their invoice within three days, with the remaining 25% after the customer has paid.      

Moody’s is developing new offerings that disseminate its data and expertise to help its customers mitigate tomorrow’s risks. By leveraging AI and machine learning, Moody’s products create efficiencies and deliver powerful insights to customers. The company deployed a copilot tool to employees to drive firmwide innovation and create a development life cycle. Moody’s Research Assistant is an add-on to CreditView that combines genAI with Moody’s proprietary data. This product is designed to find real-time answers and generate credit memos and custom reports from Moody’s extensive content. The Automated Credit Memo combines genAI technology, data and analytics to assist loan underwriters in creating comprehensive, consistent credit memos for review and approval. This solution compiles relevant information currently in a bank origination system. It combines that with Moody’s content on borrowers, market conditions and third-party data, that can be integrated with Moody’s available financial data and know-your-customer compliance data.

Following a successful launch in the UK and North America, MilltechFX expanded into Europe in March 2022. With its FX-as-a-Service offering, MilltechFX’s multibank FX marketplace helps asset managers and corporates significantly reduce FX costs and the operational burden associated with FX execution and rolling hedging requirements.  

In 2023, Citibanamex released several outstanding consumer banking innovations to improve user experience (UX). These include micro animations, messages, and its new user login splash page on its financial app.

“Our innovative mobile dashboard leverages cutting-edge UX techniques, including animated cards that dynamically display crucial information such as account balances, investment fund earnings through animated charts, and personalized offers enhanced with custom animations,” says Rosario Valdivia, Citibanamex’s CIO. “Additionally, we introduced app functionalities with animated tutorials, making complex processes simple and accessible, thereby enriching user engagement and satisfaction.”

The bank’s 360 Smart Client Hub provides personalized omnichannel customer journeys powered by artificial intelligence (AI). It uses real-time triggers to facilitate interactions, and a suite of management tools to boost operational efficiency and productivity.

“By harnessing insights from our customers through custom machine-learning models, we can meticulously analyze feedback to prioritize our digital channels backlog, provide live-moment relevant products and services, and improve our fraud detection systems,” Valdivia adds. “This approach not only enhances our responsiveness but also accelerates the delivery of tailored, value-driven solutions that elevate the customer experience to unprecedented levels. The next step is the adoption of generative AI to increase our capabilities further.”

HSBC delivered the world’s first multicurrency digital bond offering in February 2024. In addition to being a game-changer for future digital bond issuances, this was the largest-ever digital bond deal. It generated investor demand unprecedented to date for a digital bond—with over 50 global investors. The multicurrency digital bond issuance included the US dollar, Chinese offshore renminbi, Hong Kong dollar, and the euro. It also stood out for the use by the Hong Kong Monetary Authority’s central securities depository, the Central Moneymarkets Unit, of the bank’s digital assets platform, HSBC Orion.

Meanwhile, the bank has implemented Project Ascend, a scalable first for the industry portfolio nonpayment insurance offering for trade finance assets. Partnering with three leading global insurers and insurance broker Marsh, HSBC has created a granular pool of diversified midmarket enterprise (MME) and small and midsize enterprise (SME) trade loans in Hong Kong. The insurance companies provide pro rata nonpayment insurance on the entire pool of loans without the need to underwrite individual loans for individual companies, helping them to gain more exposure to trade finance in a diversified manner. While HSBC retains certain uninsured exposure on these loans, the solution makes lending to MMEs and SMEs more attractive, as the bank now can efficiently distribute its risk and free up capital.

Since ING launched a generative AI (genAI) chatbot in September 2023, thousands of the bank’s customers have interacted with it. It’s the first of its kind, as a customer-facing pilot conducted in Europe. Working as a team with global consultancy McKinsey, it took just seven weeks to build and deploy the service. Having created a path to double the performance of the chatbot in the subsequent six months, ING plans to build a scalable model that can be extended to all other ING countries and to set up a technical foundation for ING to address a comprehensive set of genAI use cases across the group. The pilot study helped define a blueprint to scale across 10 markets, with the potential to impact more than 37 million customers across 40 countries, far outpacing previous industry-standard chatbots that can take several years of programming and fine-tuning to get into shape.

By migrating its corporate and investment banking business to a new cloud-based digital banking platform, Gravity, Santander can now benefit from parallel processing. This enables it to run workloads on its existing core banking mainframe and the cloud simultaneously, allowing the bank to perform real-time testing without disrupting any of its businesses.

Once satisfied with the new system’s stability and performance, the bank can transition from the mainframe system to the cloud.

Gravity allows Santander to deploy on both private and public clouds. Having successfully migrated all its commercial customers in the UK and its consumer business in Chile without any service interruption, Santander plans to relocate most of its core banking worldwide to the Gravity platform by the end of 2024, mostly in its private cloud.

“The Santander CIB migration to the cloud is a new milestone in the group’s transformation toward a simpler, more integrated model, contributing to enhanced profitability,” Dirk Marzluf, Santander’s chief operating and technology officer, said in a statement.

Santander CIB manages over a million accounting operations and half a million treasury operations daily on the cloud via the Gravity platform. Santander estimates that the Gravity platform will operate more than a trillion technical executions within the bank’s systems every year.

Global Finance: BBVA recently introduced a machine learning (ML) pipeline for early debt recovery. What problem does this innovation solve?

Clara Higuera: When clients start facing difficulties in repaying loans, this is a double problem—for the customer and for the bank. Until two years ago, the debt recovery process was very manual, delaying offering solutions to clients.

We now have five machine-learning models that are either in development or in the production process. One model, for example, predicts the probability that a client will start facing difficulties—e.g., being unable to repay a loan—even when they are up to date with payments. Another is a model for predicting prolonged default—i.e., a default lasting two years or more for a customer already in default.

These models allow the bank to offer solutions earlier—within a month for many clients—whereas before, it could take a year before a solution was offered to those clients.

GF: What solutions or interventions can the bank apply when a loan appears to be troubled?

Higuera: It varies. It can involve a call from a financial adviser to a client or the offer of a refinancing solution. The ML models also rank clients according to their criticality, so financial advisers can prioritize which clients to contact first.

GF: Your offering uses a nonlinear boosting algorithm, XG-Boost. Nonlinear ML algorithms have been criticized for lacking interpretability. That is, it can be difficult for a bank to explain in everyday business language how it has arrived at a decision—either internally or to a client. Is this a concern for BBVA?

Higuera: Currently, we have used mainly tree-based models, like XG-Boost, which are less interpretable than logistic regression [which the bank used previously]. But for this reason, we have an evaluation and interpretability module in the pipeline that helps us visualize and understand the more important variables globally and locally.

Also, these models will not be used directly for the client but are more for our financial managers to manage debt. We do not use the most uninterpretable models, like neural networks, because we want some interpretability.

Finally, we hold sessions with the business units to analyze specific cases with them, which helps to [explain decisions and] uncover potential errors.

GF: Did the ML Pipeline require a “culture change” within BBVA before the innovation could be developed?

Higuera: The bank has used analytics for a long time and already has an established way of working. However, it took some time to build this new model, and we had to build trust to reach our goal. This was probably the most difficult part because we had to live with a lot of uncertainty.

We had to approach it by integrating the traditional methodology [i.e., logistic regression] with the new one [XG-Boost] and report performance comparisons so we could convince everyone that it worked.

It was also important that the team that was formed included data scientists from the bank’s Risk Analysis department and our AI Factory unit. As new modules were added to the pipeline, progress was constantly discussed.

GF: Is there any one of the five models that has been particularly useful?

Higuera: We see each of these as a funnel to help prevent clients from going from a critical state to an even more critical state. Each model provides insights that can slow down that movement toward default. The project is designed to be holistic—to help clients earlier.

GF: What organizational and innovation lessons have you learned?

Higuera: The value that data and AI can give to your organization is essential. Communication between the technical and nontechnical sides of the organization is also critical. Working as a team, a fundamental value at BBVA, is also essential.  

Significantly, the final rule excludes Scope 3 emissions, which are emissions from indirect sources like supply chains and consumers. These account for 75% of companies’ greenhouse gas emissions on average, according to the World Resources Institute. And some jurisdictions, such as the EU and California, will soon require such reporting.

Scope 3 had been included in earlier drafts of the US bill but was scrapped amid pressure from business lobbying groups and others. The final rule requires Scope 1 and Scope 2 emissions reporting, which cover activities more directly under a company’s control, like smokestacks, company cars and electricity usage.

Environmental groups and business associations blasted the final rule. The Sierra Club, which filed suit against the agency, said the “watered down” rule “falls short,” while the U.S. Chamber of Commerce, also suing, said the agency went too far, overturning 50 years of corporate governance precedents.

Still, some wonder if Scope 3 disclosures aren’t inherently problematic, given their lack of direct control. Kristina Wyatt, former SEC senior counsel for climate and ESG, and now chief sustainability officer at Persefoni, says there is “a misperception” that Scope 3 emissions reporting “would require companies to obtain emissions data from all their suppliers and others in their value chains. This is not the case.”

Global investors are likely going to expect Scope 3 reporting in the future, given that they account for the majority of most companies’ overall emissions. Moreover, “The SEC is not the only regulatory game in town,” adds Wyatt. “Many companies are, or will be, subject to reporting requirements that include Scope 3 in jurisdictions including California, Europe and the many jurisdictions that are adopting rules that incorporate the ISSB standards.” Suzanne Ashley, founder of Materiality Strategies and former special adviser and a senior SEC counsel, says firms shouldn’t wait for the resolution of legal challenges to the SEC rule. “Investors and other stakeholders will expect companies to have a coherent narrative around the totality of their climate-related disclosures.”

Issuance of “impact” bonds, sometimes referred to as GSS+ bonds—green, social, sustainability and sustainability-linked instruments—totaled $939 billion in 2023, a slight 3% improvement over 2022, according to Bloomberg data. The sector has yet to match the record heights of 2021.

Green bonds have dominated the impact bond category from the beginning, and 2024 is unlikely to be different. Credit Agricole analysts expect green bonds to account for almost two-thirds (64%) of GSS+ issuance this year. Other label types will be much further behind; sustainability bonds, which have attributes of both green and social bonds, are projected to make up 16% percent of the total, and social bonds 12%.

Why does sustainable finance remain so deeply green?

“There’s a sense of purpose about global climate change” that seems to transcend other impact bonds, says Vulturius. “Social bonds have always played second fiddle to green bonds.” Social bonds seized public attention during the Covid-19 pandemic, when so many people required unemployment support and social interventions, but since then interest has waned, he notes.

As for sustainability-linked bonds (SLBs), which seemed poised for a breakout in early 2022, they could now be at a crossroads. SLBs suffered “another setback” last year, “with almost $20 billion less in new issuance compared to 2022,” according to SEB Group. But “the market has now mostly learned its lesson about the importance of integrity, and how to mitigate greenwashing risk.”

That being the case, “SLBs should record a modest progression” this year, predicts Credit Agricole, while Scandinavia’s Nordea Bank, a leader in SLBs, also expects these “transition finance” instruments to gain momentum.

“It’s important to recognize that we are heading into the fifth year of SLBs versus the 15th for green bonds,” notes Petra Mellor, head of Bank Debt at Nordea Bank. “True, we have some structural aspects still to be fine-tuned for SLBs, but the market relevance is more important than ever.”

Among other trends to watch for in 2024, Vulturius cites decarbonization, blended products, and a strong pickup in North American green bond activity, especially as the IRA’s impact begins to kick in. The US presidential election in November could derail progress, but that is more a topic for 2025, he argues.

And the longer term?

It can be difficult to factor big-issue political discussions—like the recent COP28 meeting—into short-term decision-making, Mellor observes, “but one key takeaway [from COP28] was the increased recognition of transition finance” as an important financial category. That isn’t going away, she says.

Which is another reason to expect that institutions focusing on sustainable finance in its various forms will be have plenty to keep them busy in 2024. With that in mind, Global Finance here presents its fourth annual Sustainable Finance Awards, the winners spanning seven regions and 53 countries, territories and districts, as well as global honorees in 13 categories.      —Andrew Singer

Global and regional awards require submissions detailing hard measures of ESG activity, such as year-over-year growth in sustainable finance transactions or sustainable financial instruments as a percent of total portfolio, as well as softer metrics that include goal alignment with leading ESG norms or innovative product development. Entries were not required for country awards, which were judged by the editorial team’s independent research. Evaluation criteria for both cases include governance policies and goals, achievements in environmental and social sustainability financing, industry leadership and third-party assessments. This awards program covers the activities from January 2023 to December 2023. There was no fee to enter.

Societe Generale (SocGen) bolstered its reputation for sustainable finance innovation in November by serving as sole manager for the first digital green bond issued on a public blockchain and by SocGen. The €10 million senior preferred unsecured bond was tokenized and directly registered by SG-Forge on the Ethereum public blockchain. Blockchain, says SocGen, can potentially increase the traceability and transparency of ESG-related bonds for both issuers and investors.

SocGen also stands out for its reach and versatility. Last year, it was active in ESG projects on all six inhabited continents, including many parts of Africa, and it remains one of the few commercial banks that has ever issued green, social and sustainable bonds, according to Natixis.

 In the project finance sphere, the bank was active on many fronts in 2023, including in October as sole debt financial adviser and mandated lead arranger on Automotive Energy Supply Corporation’s €873 million battery storage factory in France’s Battery Valley. Elsewhere, it helped finance offshore wind projects in Poland and South Korea; onshore renewables in Japan, Australia, Egypt, and Vietnam; and critical materials projects in Mongolia and Africa.           —Andrew Singer

Since Scotiabank announced a goal of mobilizing C$350 billion by 2030 to reduce the impact of climate change, it has chalked up a series of groundbreaking transactions in Latin America’s emerging markets. Notably, the bank supported Inversiones CMPC as it brought the first green sustainability-linked bond issue in the Americas to market in June. The C$500 million in bond proceeds are allocated to designated green projects, and the coupon increases if emission targets are not met.

Also in June, Scotiabank assisted Chile on a sequence of US dollar- and euro-denominated debt issues that are helping the country meet its environmental and social objectives. The deal makes Chile the first sovereign to issue a sustainability-linked bond with a social KPI related to gender diversity.

The bank also supported Mexico’s Trust Fund for Rural Development (FIRA) in April when it placed Latin America’s first green resilience bond on the Mexican Stock Exchange. The US$154.89 million offering is intended to improve the resilience of producers and value chains in the agriculture sector. Proceeds are financing projects to reduce the impact of extreme climate events and strengthen systems against climate stress.          —Andrea Murad

The DBS team helps clients access Asian debt capital markets and raises bond financing for environmental, social and governance-related efforts on the continent. In February 2023, DBS Securities China issued a three-year, AAA-rated onshore panda bond for China Power International; funds were to be used for the development of green power projects. In September, DBS acted as joint lead manager and joint bookrunner on a $650 million, five-year social bond for Hong Kong Mortgage Corporation, the proceeds earmarked to help the company alleviate the financial burden on small to midsize local businesses affected by the Covid-19 pandemic. In 2023, the bank served as joint lead underwriter for the Asian Infrastructure Investment Bank’s ¥1.5 billion, five-year Chinese bond issue aimed at funding sustainable economic development, wealth creation, and improved infrastructure connectivity in Asia.           —Laura Spinale

Industrial Bank of Korea is at the forefront of South Korean’s sustainability field, having launched the nation’s first ESG-related loans in 2022. Offerings have included a KR₩200 billion fund for the RE100, a global initiative encouraging businesses to convert to100% renewable energy. The fund is to provide loans to energy providers that, in turn, will supply renewable energy to companies pursuing RE100-compliant strategies. In partnership with DS Asset Management, Industrial Bank of Korea also created an ESG fund totaling KR₩100 billion to support SMEs and other companies engaged in renewable energy production, eco-friendly power generation, and smart farm development. These and other initiatives boosted the bank’s sustainability financing engagement 15% from 2022 to 2023, to KR₩718.3 billion.           —LS

Canada’s CIBC acted as joint bookrunner on several corporate green and sustainable bond issues last year, including Ontario’s $1.5 billion green bond offering in February, earmarked to support clean transportation and energy efficiency. In November, CIBC was selected by the Canadian government as sole structuring adviser for updates to its Green Bond Framework.

The bank was also bookrunner for Canada’s largest corporate sustainable bond to date in 2023: Hydro-One’s inaugural $1.05 billion issue. Hydro-One will use the proceeds to finance both green and social projects, in keeping with the hybrid nature of sustainable bonds.            —AS

Spain’s CaixaBank takes a multipronged approach to supporting local communities. First, it is Europe’s largest bank provider of microcredits and other loans with a social impact; in the first nine months of 2023, it extended €991 billion of microcredits, an increase of 24% year-over-year.

Second, CaixaBank sustains communities as an issuer of social bonds such as its €1 billion issue last May funding loans to families, self-employed workers and SMEs in Spain. The offering that provides vulnerable people with access to education and healthcare was significantly oversubscribed.

Finally, the bank provides conceptional support, helping to expand the definition of sustainable finance to include deals with individuals and companies, and not just contributions to SDGs, as per its 2023 Guide of Identification of Sustainable Financing.      —AS

OTP’s extensive operations in 12 countries across CEE – Romania, Bulgaria, Croatia, Serbia and Montenegro, and, of course, its home market Hungary— and Uzbekistan and Moldova — have given it access to the growing opportunities for sustainable finance. As well as taking up these opportunities, the OTP Group has led the way in sustainability transparency, standardizing business practices, following a tough anti-corruption policy and prioritizing good corporate governance.

In 2022 the Green Loan Framework was rolled out across the OTP Group to ensure consistency and transparency in the way subsidiary banks manage ESG loans and projects.

Last year saw a further improvement in OTP’s overall ESG Risk Score, and today risk is negligible in business ethics and product governance and low in the areas of data privacy and security, ESG Integration, financials and human capital.   —Justin Keay

Financing for the €4.1 billion Baltic Power project, Poland’s first offshore wind farm, came in last September with the Netherlands’ ING acting as sole sustainability coordinator. The project is expected to supply clean electricity to more than 1.5 million Polish households.

ING’s infrastructure focus does not end in Europe, however. Last year, it closed a KR₩440 billion green loan with Digital Edge to support the first phase of the company’s 100-megawatt data center project in Seoul, South Korea. The Singapore-based firm aims to build sustainable, high-speed digital infrastructure throughout Asia. —AS

Sustainability-linked bonds encountered headwinds in 2023 as questions were raised about both their structure and the credibility of their performance targets, but Finland’s Nordea, an SLB pioneer, insists that they will remain “a key tool for the market.”

In August, Nordea issued a €1 billion sustainability-linked loan bond (SLLB) that employs use-of-proceeds bonds to fund a portfolio of sustainability-linked loans. SLLBs are a potential game changer in the view of some because their structure provides an additional layer of accountability and scrutiny for investors.           —AS

At COP28, the World Bank Group set an ambitious goal to devote 45% of its annual financing to climate by 2025, having committed and mobilized a record $14.4 billion in climate finance in 2023.

The International Finance Corporation (IFC) is scaling up financing to clients through its capital and mobilizing external resources with significant already agreed-upon and implemented measures, and more proposed, to leverage existing resources further while maintaining financial sustainability.

New initiatives include blue-themed bonds to support sustainable ocean economies, a $1.5 billion three-year social bond to help low-income communities in emerging markets and a $3.5 billion credit insurance policy with 13 global insurance companies to support economic activity and foster development in emerging markets.     —GW

The green agenda has been a priority for the African continent for some time, particularly for the private sector. Environmental, social and governance (ESG) initiatives can drive growth in GDP, per capita income and jobs, while fostering collaboration between countries, businesses and communities—and banks are an integral part of this process. Yet, a significant funding gap hinders the continent from achieving the United Nations Sustainable Development Goals (SDGs). While there’s rapid growth in ESG debt instruments, including green, social, sustainability and sustainability-linked bonds, according to Sustainable Fitch, the overall scale of sustainable finance in Africa is still small.

Even so, there are numerous success stories of green ventures in Africa, according to the UN Environment Programme (UNEP). For example, the transition to sustainable agriculture contributes about 17% of sub-Saharan Africa’s GDP and increases productivity while minimizing the impact on ecosystems and helping to reduce food insecurity. The blue economy and ecotourism can generate $576 billion and 127 million jobs over the next 40 years. Renewable energy solutions can contribute 6.4% to GDP over the next 30 years, as Africa has abundant solar, wind, geothermal, hydro, biomass and other natural resources that can be used for innovative solutions.

To meet these needs, the banking sector has continued to provide financial and nonfinancial support, funding projects across the continent. They have also continued to develop innovative products and to revitalize debt capital markets in countries across Africa.

Societe Generale (SocGen) continues to lead in Africa’s sustainable finance. The bank’s successful “Grow with Africa” campaign has continued to contribute to Africa’s sustainable development.

The bank’s infrastructure finance teams support projects to develop wind farms, solar farms and sustainable water and wastewater management projects, and to upgrade hospitals and modernize transport systems. SocGen supports the development of African small and midsize enterprises (SMEs) with expertise, advice and training, as well as an awareness of environmental and social issues.

SocGen strengthened its support in the agriculture sector by facilitating value chains, contributing to a virtuous ecosystem of nonfinancial support to help sector players scale, and by focusing on the blue economy and biodiversity with offerings related to monetizing carbon credits for the maritime sector.

The bank remains dedicated to financial inclusion initiatives and provides access to financial services to populations with limited banking services.

Societe Generale Madagasikara has contributed positively to Madagascar’s sustainable development and supported the country’s ecological transition by working with its customers and communities to follow a more sustainable investment strategy. The bank has changed how it conducts business in several ways, including the “one card equals one tree planted” product launch with the CSR consulting service Bondy, which is focused on reforestation and restoration of biodiversity that ultimately creates jobs. The bank remains committed to education and professional integration, providing funds to help build a better future for youths and structuring projects to build schools and transition some schools to solar energy. Also, the bank financed the rehabilitation of damaged public schools and provided computers.

The Pan-African financial services provider Absa embraces its ethos as an active force for good in its strategy and remains committed to driving tangible, meaningful change in its communities. The bank has worked on several sustainable bond issuances this past year.

Most notably, Absa Group served as joint lead transaction adviser on NMB Bank’s first sustainability-bond issuance, which was a first for Tanzania and East Africa and fostered sustainable finance across borders. The issuance was NMB’s inaugural listing on Tanzania’s Dar es Salaam Stock Exchange. The NMB Jamii Bond’s proceeds are to be used for green initiatives that will enrich the regional environment and finance impactful social projects empowering and uplifting Tanzanian communities socially and economically.

Standard Bank is committed to a strategy for driving sustainable and inclusive growth in Africa based on pillars of social, economic and environmental impact. The bank aims to drive positive impact in line with SDGs to ensure effective ESG-risk management and good practices.

The bank issued 45 billion South African rands (about $2.3 billion) in sustainable financing, including green loans that funded renewable energy projects and green buildings; social loans that delivered affordable housing, basic infrastructure, and essential services in health and education sectors across the continent; and the bank’s first transition finance loan in the thermal coal sector. The bank also participated in sustainability-linked funding across multiple industries that embedded material sustainability key performance indicator (KPI) themes addressing carbon emission reductions and renewable energy consumption, water and waste management, diversity and inclusion and micro- and small-business funding and support.

Standard Bank also mobilized 15.5 billion rands in green project finance and 1.2 billion in social project finance funding renewable energy, carbon projects, basic infrastructure and affordable housing in numerous African countries. These projects include assisting African power producer Red Rocket in developing, designing, constructing and operating wind farms with a combined installed capacity of 280 megawatts (MW) in the Western Cape and 84 MW in the Eastern Cape.

Based in Egypt, CIB (Commercial International Bank) drives change within African emerging markets through pioneering initiatives. The bank recently launched “Brain Trust,” an innovative model that addresses the gap in finance for adaptation projects and mobilizes private investments for pipeline projects in Africa’s agriculture, food and water systems.

CIB also expanded its sustainable finance offerings in 12 corporate and SME financing areas. These include energy efficiency, renewable energy, green building, waste and water management, water desalination, energy management systems, pollution prevention and control, and sustainable agriculture and transport. CIB’s expanded climate finance offerings enable the transition toward a low-carbon economy by addressing the environmental challenges carbon-intensive industries face.

Based in South Africa, Nedbank is a pioneer in green finance, being the first bank in the country to embrace many climate-related initiatives. The bank launched its Green Private Power Tier 2 Bond, with a notional value of 2.1 billion rands, in 2023. This on-balance-sheet transaction was used to finance a portfolio of private renewable power-generation projects in South Africa, including photovoltaic solar and wind projects. These projects help advance South Africa’s renewable energy capacity and accelerate the transition to a low-carbon economy. Nedbank also structured, arranged and invested in a 550 million-rand green bond facility for Burstone Group to finance and refinance a portfolio of green buildings.

IFC (International Finance Corporation) has a vision to create a world free of poverty on a livable planet. As such, it has been a leader in social bonds and sustainable finance in Africa. IFC provided an anchor investment in the West African Economic and Monetary Union’s first social bond in the energy sector that supports the Electricity for All Program (PEPT), a government-led program facilitating access to electricity for underserved populations in electrified localities. Bond proceeds help finance the connection of up to 800,000 low-income households to the national grid over the next four years. 

The strategy of Rand Merchant Bank (RMB) embraces the sound management of natural resources, a cornerstone of sustainable social and economic development.

The bank participated in financing the Development Bank of Rwanda’s inaugural sustainability-linked bond (SLB). This SLB was the first globally issued by a national development bank and the first issued in East Africa. The issuance was structured to recognize the systemic change required for a development bank to meet its sustainability performance targets (SPTs) and to revitalize Rwanda’s debt capital markets.

RMB also established a sustainability-linked financing framework (SLFF) with chemical manufacturer AECI, designed to facilitate SLB and sustainability-linked loan (SLL) issuances. When opportunities arise, the SLFF more broadly overlays KPIs and SPTs on other financial instruments and services. AECI successfully used this framework to debut its 1 billion rand SLB with KPIs focused on effluent discharge, carbon emissions, and gender diversity.  —Andrea Murad

There is no denying that Asia has pollution problems. According to UNEP, roughly 6.5 million people die each year from exposure to poor air quality, and 70% of them live in the Asia-Pacific region. Water pollution and industrial waste also plague the region. However, thanks in no small part to the financing efforts of the following banks, there is hope. Funding for sustainable development projects, clean public transportation, offshore wind farms and other renewable energy efforts will help improve the local environment. And social financing geared toward supporting small farmers, microbusinesses and women-owned businesses will forge a brighter financial future for those living in a cleaner world.

With operations in Singapore, China, India, Indonesia and Taiwan—and strong efforts in transparency, support for emerging markets, ESG-related loans and bonds, and transition/sustainability-linked loans in those markets—DBS takes Asia’s regional award for the Best Bank for Sustainable Finance. Consider its operations in China as one example of its strength on the continent. By the end of 2023’s third quarter, the green loan balance in that country had increased 37% from the balance held in January of that year.

DBS touts itself as the bookrunner of choice for bond issues in Asia and a pioneer bank for ESG capital instruments. Notable ESG activities include working with the People’s Bank of China. This relationship enables DBS China to offer low-cost loans to fund sustainable development projects—including clean energy projects and projects geared toward reducing carbon emissions. Notable financing includes a 572.2 million Chinese yuan (about $79.5 million) green loan to Weifang Bohai Bay Photovoltaic Technology and Weifang Tianen Binhai New Energy to support a photovoltaic power plant project. The loan was issued in November.

Reporting on sustainability since 2015, DBS published its first stand-alone sustainability report in 2018. These reports are produced in accordance with Global Reporting Initiative standards. In 2021, the bank became the first bank in Singapore—and among the first 100 banks globally—to become a signatory to the Net-Zero Banking Alliance. In 2022, it outlined its progress toward the alliance’s goals in a report called Our Path to Net Zero: Supporting Asia’s Transition to a Low-Carbon Economy. That report describes in great detail how the bank selected decarbonization activities, and the science behind those decisions. Goals are set for 2050, with interim goals listed for 2030. The bank has also produced green credit guidelines, a sustainable- and transition-finance framework, responsible business-practice pillars, and community impact analyses—all available for public perusal. For all these activities, DBS earned our award as the Best Bank for Sustainability Transparency in Asia-Pacific.

Additionally, the bank has won our award as Best Bank for Sustainable Financing in Emerging Markets in Asia-Pacific, with strong work in China, India, Indonesia, Singapore, and Taiwan. As a leader in Asian emerging and local currency bond markets, it has funded various sustainability-related projects. DBS China completed the drawdown of a $297 million term loan for China Three Gorges’ acquisition of Alcazar Energy Partners’ solar and wind projects located in Jordan and Egypt, with a total capacity of 411 MW. DBS also partners with clients to facilitate Asia’s transition to clean energy as part of its effort to reduce and eventually eliminate coal-fired power. It has developed a climate analytics tool for net-zero banking, examining, at a portfolio level, the bank’s goals for existing and new customers in the power, oil, gas, real estate, steel and aviation sectors. It works with partners to decarbonize Asian supply chains for its clients, and it provides loans to accelerate decarbonization.

By providing sustainable financial solutions tailor-made for microbusinesses, farmers, fishermen and other traditionally unbanked citizens, BPI (Bank of the Philippine Islands) is doing much to help develop sustaining communities in that nation. One example of these solutions is the JFC Agri Loan Financing Program. This financing mechanism is specifically designed for small-scale farmers—particularly farmers who act as suppliers to BPI corporate client Jollibee Foods Corporation. This financing facility gives small farmers (working on average plot sizes of less than 1.5 acres) access to affordable financing in a region known for very high interest rates on microloans. Microfinance solutions are only one arm of BPI’s ESG work. 53% of its total loan portfolio supports the UN SDGs.

The Bank of China (BOC) won as Best Bank for Sustainable Infrastructure Finance in Asia-Pacific for its work on the nation’s first marine-ecology-oriented development project, the Dongtou Bays • Sea Garden project. The goal of this four-year project is to create needed environmental infrastructure. It also seeks to solve ecological maladies, such as the accumulation of sea garbage in the bay. The BOC funded the project via underwriting bonds for it, along with other infrastructure finance in Asia linked to carbon-emissions reduction.

The bank’s second win, as Best Bank for Sustainable Bonds in Asia, is due to its funding of a broad range of sustainable project categories across the globe. Projects funded promote renewable energy and green buildings and strive to prevent pollution.

These bonds are part of the $1.9 billion in green and sustainable bonds the BOC has floated in overseas markets and 30 billion yuan in sustainable and green bonds in China. The bank has also underwritten 286.2 billion yuan in domestic green bonds and sustainable bonds and $24.8 billion in green and sustainable bonds overseas.

Meanwhile, the bank also prides itself on an abundant and diversified portfolio of green products and services marketed under the BOC Green+ global brand. Among the dozens of loans, trade finance products, services, and deposit products offered are bonds linked to transition and sustainability. These cover efforts in clean transportation, renewable energy, green buildings, pollution prevention and control, and sustainable wastewater management. Recent offerings fund efforts to reduce carbon emissions by constructing new wind power facilities. Additional projects funded seek to improve the management of marine environments, earning BOC the Best Bank for Transition/Sustainability-Linked Bonds in Asia-Pacific award.

CTBC acted as the mandated lead arranger and bookrunner for the Hai Long offshore wind project, the largest such project—in terms of capacity and cost—in Taiwan. It will generate an estimated 1,022 MW of clean power. CTBC has also supported other similar projects, providing financing for 605 MW and 300 Mw offshore wind developments. The bank further acted as a structuring bank for a 17 MW waste-to-energy incinerator built by Cleanaway Energy. This incinerator is dedicated to processing solid recovered fuel. Once processed, this high yield recovered fuel will be used for power generation rather than being disposed of in a landfill. For these and other activities, CTBC has been named Asia-Pacific’s Best Bank for Sustainable Project Finance.

In 2023, the Thai ESG-bond market had an estimated value of 44.9 billion Thai baht (about $1.25 billion). Nearly 28.4 billion of that—63% of the total Thai ESG-bond market—was underwritten by Bangkok Bank. Among projects financed by these bonds was the Xayaburi Power Company’s 3.5 billion baht green bond to design, develop, construct and operate a hydroelectric power plant. Bangkok Bank also underwrote a 3.9 billion baht bond for Energy Absolute Public Company to modernize its buses—supplanting the current internal-combustion buses used for public transport in Bangkok with clean-running e-buses. Additional projects funded include biomass facilities, hydropower projects, solar power facilities and offshore wind power projects.

The Industrial Bank of Korea says it was responsible for 81% of the ESG bonds issued in South Korea in 2023, totaling 6.9 trillion South Korean won (about $5.2 billion). The bank continues to promote the acquisition, trading and issuance of ESG and social bonds. Many of its bonds, indirectly guaranteed by the South Korean government, support small and midsize industries. It has been involved in successful social bonds with organizations such as the Korea Credit Guarantee Fund, the Small and Medium Business Corporation, and the Korea Housing Finance Corporation. In late 2023, the bank issued a $600 million five-year gender-equality- themed social bond. Proceeds will be used to finance or refinance new or existing loans to SMEs and projects supporting gender equality. In further ESG efforts, the bank’s insurance arm invests in green bonds and other eco-friendly projects to promote the expansion of ESG finance and to support carbon neutrality.

The bank also launched that nation’s first ESG-related loans. It established a 200 billion won fund to finance renewable energy providers that, in turn, supply renewable energy to companies seeking to be powered entirely by renewable energy. This has earned it our Best Bank for ESG-Related Loans in Asia-Pacific award. (For more information on this and other initiatives, see the Industrial Bank of Korea’s entry in our Global Winners section.)

ING takes the regional award for Transition/Sustainability-Linked Loans for several efforts. These include its position as sole sustainability coordinator on Southeast Asia’s first private equity backed, leveraged SLL. This $790 million deal supports the activities of the Goodpack company. Based in Singapore, Goodpack is the world’s largest provider of reusable pallet-sized metal containers for road, rail and sea shipments. The funds will support Goodpack’s efforts to implement circular supply chains, or supply chains that reuse materials and goods as long as possible. A second, $403.8 million loan issued by ING supports a company called EdgeConneX in its efforts to build more environmentally sensitive data centers. —Laura Spinale

If 2023 was notable for anything, it was the growing awareness of the urgent need to tackle global climate change. This was compounded by the year becoming the hottest ever recorded, with weather events once considered freaky now increasingly commonplace in many countries, including those across Central and Eastern Europe (CEE). The region’s banks have put themselves at the forefront of this new awareness, operating more sustainably but also looking to take advantage of what will be major commercial opportunities going forward.

Last year, our Sustainable Finance Awards reported that CEE’s banks have moved away from greenwashing. This trend has become more pronounced, with institutions demonstrating awareness of the UN’s 17 SDGs and the Paris Agreement climate goals, and how the banks can meaningfully play their part in creating a greener future. Increasingly, banks are not just identifying opportunities but are working with clients to help them shift toward greater sustainability, which will be vital in driving the whole process forward over the long term.

Established 95 years ago and Poland’s second-largest bank, with around $9 billion of Tier 1 capital, Bank Pekao has long been committed to sustainable finance, which forms the cornerstone of its 2021-2024 business strategy: Responsible Bank, Modern Banking. It is dedicated to reducing the financing of energy-intensive projects, has its ESG strategy closely monitored by an ESG council, and has been making steady progress toward its goal—outlined in its business strategy—of financing 30 billion Polish zloty (about $7.6 billion) of sustainable projects by the end of 2024. (As of the third quarter of 2023 it had reached 22 billion zloty.) Green financing now accounts for 6.6% of all projects, actually above the aim of 4%, while some 30 different initiatives are underway to meet the above sustainable finance goal.

Bank Pekao has pursued a dynamic green bond and SLB issuance program. Through 2023, it was involved in leading, coordinating, financing and/or co-financing at least eight major projects, including a 3.9 billion zloty 1.2-gigawatt offshore wind farm, a 3.5 billion zloty green bond issue for a leading CEE media company, a 0.5 billion zloty contribution toward a new public-private financed tram line in Krakow. The bank also co-organized a 180 million zloty green bond issue for an international property group.

In the wake of the devastating earthquake on February 6 last year that struck Antakya and 11 towns in the surrounding region, Isbank secured $915 million from the Turkey: Disaster Response Framework of the European Bank of Reconstruction and Development (EBRD) to target recovery. It has financed and supported female entrepreneurs through numerous projects, including WeLead, which reached 3,500 women last year. It has also worked as part of a consortium to help refinance $574 million in renewable energy power plants. It has provided green loans to two companies to produce electric/hybrid tugboats.

Hungary’s largest bank, with an extensive network of branches across Hungary and 12 other CEE countries, OTP Bank has long put sustainability at the heart of its business model. By the end of 2023, it had reached 230 billion Hungarian forints (about $642.4 million) in green loans (both corporate and retail), laying out its policies clearly through careful internal monitoring and through its ESG Exclusion List, which has been incorporated into its green loan framework to ensure that no investment takes place in any of the prohibited sectors.

The OTP Group has led the industry in sustainable project finance through its network of operations across CEE. In Romania, together with OTP Hungary, OTP Bank Romania participated in numerous syndicated loans to support sustainable real estate developments in Romania. The total exposure for these projects amounted to €115 million (about $124.9 million) by the end of 2022. OTP financed wind and solar energy production projects by more than €55 million, targeting a new generation capacity of over 1,250 MW from renewable sources.

The bank’s unique reach across CEE—in countries such as Romania, Bulgaria, Croatia, Serbia and Montenegro—has given it access to growing opportunities for sustainable finance, with standardization of business practices and products encouraging the growth of sustainable financing in these countries. By the end of the third quarter of 2023, the OTP Group reported 403 billion forints in sustainable financing business across the region.

OTP Bank’s ESG-related loans have been on a rising trend over the past few years. Sustainalytics judges that OTP’s overall ESG risk score improved from 17.8 to 14.6, putting it into the low-risk category, with risk negligible in business ethics and product governance, and low in the areas of data privacy and security, ESG integration, financials and human capital.

One of Turkey’s largest banks, Akbank provided loan support to the Turkish economy of 1.2 trillion Turkish lira (about $38.5 billion) over 2023, with a strong focus on sustainable investment. It has provided 174 billion lira in 2023 to support a sustainable future, reaching 87% of the 2030 target of 200 billion lira in sustainable loan financing.

The bank has been very active in social bonds and transition-linked loans, increasing issue volume by about 100% for the year as of the end of 2023’s third quarter. Social loans over the first three quarters of 2023 increased 34 times over 2022, with a large proportion of this assisting the areas affected by February’s earthquake. Separately, Akbank contributed 650 million lira to help redevelop these areas and a further 10 billion lira in support to its customers in the area. An agreement signed with the EBRD secured a loan agreement of $90 million to be distributed in the region.

Akbank has also launched Turkey’s first sustainable deposit product, aimed at commercial customers, to enable them to contribute actively to projects aligned with the UN’s SDGs. The bank has supported SMEs through its SME Eco Transformation Package in collaboration with IGE (a company facilitating exports through guaranteed practices for companies) and by launching the IGE-Akbank Green Transformation Guarantee Support Package in 2023, explicitly aimed at helping SMEs to reduce their carbon footprint and lower their energy costs.

As the second-largest bank in Austria, Raiffeisen Bank International (RBI) has expanded into 13 CEE markets and had total assets of €198 billion at the end of 2023. Amid a corporate strategy to “make sustainability happen,” RBI plays a leading role in sustainable bonds, for which it was the fourth-largest issuer in CEE in the first three quarters of 2023, according to Bloomberg data. Sustainable bonds come in several formats (linking with ESG ratings or sustainability targets or linking through proof of sustainable use of funds), and RBI included two corporate bonds (ESG volume of €755 million and ESG volume share of 17%) and seven bonds issued by sovereigns or financial institutions (ESG volume of €2.6 billion and an ESG volume share of 7%).

The Development and Investment Bank of Turkey was founded by the Turkish state in 1975 and was committed to environmentalism long before it became widespread. Its share of SDG-related loans has reached over 90% of its portfolio, while the share of climate and energy SDG loans is now 60%. The bank’s loans have had a marked impact on reducing Turkey’s carbon footprint—the bank has financed 388 projects, accounting for over 15% of the country’s installed renewable energy projects, while it has helped fund 156 projects aimed at boosting renewable energy, cleaning wastewater and reducing industrial emissions.   —Justin Keay

Over the past few years, most Latin American countries have updated their nationally determined reductions of greenhouse gases under the Paris Climate Agreement, with some joining the High Ambition Coalition’s 30×30 initiative to protect the world’s terrestrial and marine areas. Achieving net-zero by 2050 will push Latin American spending to about $20 trillion, with annual spending on physical assets increasing by about $700 billion, according to McKinsey & Company. Because of their geographies, natural resources and economies, Brazil and Mexico account for over half the investing needs in this region.

Latin American banks are vital to this transition to a more sustainable economy, as they have been integral in developing and financing innovative sustainable debt. According to Sustainable Fitch, debt financings from this region have diverged from global trends in that they’re more focused on social objectives. The region has also seen an increase in unique financial instruments, like SLBs, that have KPIs linked to gender diversity and are issued by sovereign nations.

There’s a strong focus on developing infrastructure for underserved communities in Latin America. Banks have financed significant deals in the region that provided, for example, sanitation and water services and renewable energy. Sustainable debt instruments also fund forest conservation and initiatives to preserve the environment, as agriculture is a top industry in this part of the world.

Based in Brazil, BTG Pactual incorporates ESG criteria into its decision-making processes to understand the risks and opportunities of each new relationship as it relates to the environment, society and climate. The bank is committed to assisting clients in their transition to a sustainable low-carbon economy. To date, it has exceeded over 74 billion Brazilian reais (about $14.9 billion) in ESG-labeled issuances, reaching its CFO Taskforce goal two years ahead of schedule.

The bank has participated in notable financings to promote its ESG goals. BTG Pactual contributed to sanitation programs in Brazil with sustainable, blue, and sustainability-linked bonds in local and offshore markets. The bank worked with mega-operations of water and sanitation firms Aegea and Iguá, and contributed about 15 billion reais in ESG bonds for sanitation—with over 10.6 billion reais having a blue label. As the bank was one of the first to issue blue bonds, it has consulted with companies to help them develop a blue framework or structure blue bonds, contributing to expanding private company funding and disseminating the blue label in local markets. BTG Pactual also contributed to Aegea’s issuance of a sustainable and sustainability-linked bond with KPIs related to social and environmental issues.

Banco do Brasil’s long-term commitment is to assist its clients in their transition to a more sustainable economy. The bank has provided transparency through its ESG Databook and quarterly Management Discussion and Analysis reports during this process. These detail Banco do Brasil’s activities and finances regarding its sustainable financing activities. The bank has also maintained top ratings from MSCI and Sustainalytics and has had external reviews from consultancies regarding its sustainable credit portfolio and sustainable finance framework. Banco do Brasil recently approved its proposals and corresponding action plan. The bank’s policies covering environmental, social and climate issues are included in business and administrative practices.

Itaú BBA is committed to sustainable development in the countries where it operates, and this commitment is part of its activities and strategy combining environmental, social and climate aspects. The bank worked with sanitation firm Aegea to finance the Águas do Rio 1 and 4 projects to strengthen water and sanitation services. This is the largest infrastructure debenture and ESG-labeled transaction in the Brazilian market, with 5.5 billion reais raised in sustainable and blue debentures. The project will benefit 27 municipalities and 124 neighborhoods in Rio de Janeiro by achieving 99% water coverage by 2032, 90% sewage coverage by 2033, and reducing water losses to 25% by 2033.

Based in Brazil, Bradesco BBI has achieved at least 86% of its goal of mobilizing 250 billion reais in sustainable finance by 2025. The bank also set goals for net-zero first-round commitments for the coal, electricity generation, agriculture and food sectors.

The bank participated in Eletrobras’ largest issuance, a seven billion reais sustainable debenture that funds renewable energies, transmission lines, green hydrogen, access to renewable energy for populations in isolated areas, forest conservation, and access to education for underprivileged populations.

Bradesco BBI helped to finance Cogna Educação’s 500 million reais social bond. A first of its kind in the Brazilian market, bond proceeds provided educational resources to socially vulnerable municipalities.

The bank was also the bookrunner and ESG coordinator of Comerc Energia’s 1 billion reais green debenture, the company’s first green debenture for renewable energy, energy efficiency, efficient lighting and green hydrogen. Bradesco BBI helped define initiatives and environmental benefits derived from this transaction, and these are included in a framework encompassing Comerc Energia’s future issuances.

Bradesco BBI served as bookrunner and ESG coordinator of 5.5 billion reais Águas do Rio 1 and 4 sustainability and blue debentures that fund water and sanitation services provided by Aegea. This issuance is one of the largest in the local market.

BBVA’s strategy is focused on increasing growth through sustainability, achieving neutrality of green gas emissions, and promoting integrity within stakeholder relationships. Green bonds have become a core part of the bank’s strategy as it helps its clients transition toward a sustainable future. According to Bloomberg, BBVA was ranked the most active bookrunner in Mexico in 2023 for sustainable bonds.

The bank served as joint bookrunner for Colombia’s inaugural social bond with a $2.5 billion notional amount. This bond is the country’s first ESG-labeled offering in international capital markets and leverages the republic’s green, social and sustainable sovereign bond framework.

Based in the Americas, Scotiabank has been working to advance climate transition and promote sustainable economic growth. In 2023, the bank underwrote 7.7 billion Canadian dollars (about $5.7 billion) in green loans and CA$4.7 billion in SLLs. Scotiabank was the sustainability structuring agent on Empresa de Telecomunicaciones de Bogotá’s SLL. The structure encourages replacing copper wiring with fiber optics in the metropolitan area of Bogotá and developing equity strategies by training women in issues related to information and communications technologies.          —AM

As a region, the Middle East highlights the tension between financing fossil fuels and achieving genuine sustainability.

The economies of many Middle Eastern nations, including the UAE, heavily rely on fossil fuel revenue. Banks play a crucial role in financing these industries, which directly contradicts the environmental pillar of sustainability.

A complete withdrawal from fossil fuels would be economically and socially disruptive in the Middle East and the global markets where it sells oil and gas, so the region’s banks are establishing a more transitional role, facilitating a gradual and managed transition towards cleaner energy sources, while still supporting current economic realities.

Green financing is increasing, with the region’s biggest banks actively increasing their investments in renewable energy and sustainable projects. In addition to adapting and transitioning their portfolios to keep pace with global and local ESG regulations, they are also taking steps to provide greater transparency and accountability by measuring and publicly disclosing the environmental impact of banks’ investments. Looking forward, banks in the Middle East are well-placed to help finance the global transition trend.

On its third iteration of its Sustainable Finance and Product Framework, QNB Group has developed a clear road map for integrating sustainability into its business practices and offerings. Green finance solutions include dedicated green, social (including SME financing), and sustainability-linked financing. Having issued the first green bond issued by a bank in Qatar in 2020, QNB executed the first interbank green deposit in the local market, completed green deposit placements with a large sovereign wealth fund, and in 2023, issued the first corporate green guarantee for renewable energy.

QNB’s eligible green loan portfolio in the geographies with established sustainable financing targets saw an increase of over 45% between December 2022 and November 2023, while QNB Group’s total sustainable financing portfolio of $8.5 billion is about 4% of the group’s total loan book.

A loan agreement with the EBRD will provide disaster relief in Turkey via QNB’s Turkish subsidiary, QNB Finansbank. A strong partnership with the EBRD since 2015 has resulted in more than $750 million of agreements. In March 2023, Egyptian subsidiary QNB Alahli launched the first green retail-financing program in cooperation with the EBRD to invest in green projects in Egypt.

Arab Bank has established a sustainability department responsible for systematically managing the goals and programs to improve the bank’s economic, social and environmental impacts. At the same time, a formal Sustainable Finance Framework outlines five focus areas: responsible financing, employee empowerment, transparent reporting, system optimization and community cooperation. Arab Bank actively invests in local communities through various programs, supporting education, health care and environmental initiatives.

The bank’s community investments totaled $20 million in 2022, with the Abdul Hameed Shoman Foundation and Arab Bank’s Corporate Social Responsibility program, “Together,” leading the charge. Arab Bank also offers a range of products including green loans, social impact bonds and climate-focused investments—helping clients meet sustainability goals.

Boursa Kuwait has a corporate sustainability strategy outlining its goals and initiatives across ESG’s three pillars: environmental, social and governance. It publishes annual Sustainability Reports detailing progress and performance on ESG metrics. Boursa Kuwait also offers a guide to help market participants integrate ESG reporting into their operations and provides workshops to advocate corporate and capital markets sustainability.

Eco-friendly practices within its office operations to reduce energy and water consumption while minimizing waste culminated in Boursa Kuwait being awarded a LEED (Leadership in Energy and Environmental Design) Gold certification by the Green Building Council in 2023. While admitting it has limited environmental impact as a stock exchange, the complete renovation of its main trading hall to include greener state-of-the-art technologies sends a powerful message to the entire region.

In line with the Kingdom of Saudi Arabia’s Vision 2030 to diversify the economy away from oil, SAB (Saudi Awwal Bank) is committed to achieving sustainable financing and investments of 34 billion Saudi riyals (about $9 billion). To this end, SAB is the lead arranger for the 14 billion riyal financing raised to support the Red Sea Project, which prioritizes renewable energy and regenerative tourism and played a significant role in the inaugural green bond issuance of the kingdom’s Public Investment Fund.

As of December 2023, SAB has allocated around $3 billion toward sustainable finance projects, while SAB doubled its funded assets toward sustainable finance year-on-year. Financed projects include the $8.5 billion NEOM Green Hydrogen Company—the world’s largest green hydrogen production facility—which will play a crucial role in producing clean energy.

First Abu Dhabi Bank (FAB) is the first bank in the Middle East and North Africa to target net-zero emissions by 2050, addressing the bank’s operations to supporting clients’ transitions. Committed to providing $135 billion in sustainable and transition financing by 2030, FAB is on target to achieve this. In 2022, FAB facilitated in excess of $23.6 billion of sustainable finance: $9.5 billion in SLLs and $10.6 billion in green and social loans. FAB’s Green Bond & Private Placement accounted for 17% of all FAB Bond & Private Placement in 2023, and 12% in 2021, with an annual increase of 42%.

FAB issued a $600 million five-year green bond last year and a three-year $353.9 million sukuk to fund green and social projects.

As the principal banking partner of COP28, the NBD Group, including Emirates NBD Capital (EmCap), pledged to mobilize more than 100 billion Emirati dirhams (about $27.2 billion) of sustainable finance by 2030. With EmCap’s support, clients mobilized more than $15 billion of sustainable finance in 2023 (67%) in the debt capital markets and 33% via labeled loans. EmCap successfully closed more than 20 green and sustainability bonds in 2023.

In 2023, EmCap ranked first in the Gulf Cooperation Council countries for bond issuances and was the highest-ranked regional bank in international sukuk. In 2024, EmCap hopes to take a global role in advising on labeled bonds and loans and structuring sustainability-linked tools. EmCap also plans to facilitate debt-for-nature swaps—involving developing debt being restructured, along with a promise that some funding is allocated for nature-related projects.

In late 2023, Abu Dhabi Islamic Bank (ADIB) raised $500 million by issuing Shariah-compliant green bonds, oversubscribed 5.2 times; this was the world’s first green dollar-denominated sukuk. ADIB aims to allocate an amount equal to the net proceeds of this issuance to fund green projects to accelerate climate transition. This may include financing or refinancing green projects, as well as financing customers for eligible green projects.

In launching its ESG strategy for the next three years, ADIB aims to take advantage of the overlap between the principles of Shariah law and ESG integration to maximize positive impacts. Financial instruments issued under ADIB’s sustainability framework include green, social and sustainability sukuk.

The number of green loans provided by the National Bank of Kuwait (NBK) increased by 14% in 2023, resulting in an increase of 10% in the total monetary value of green financing. This is in addition to a twofold increase in the number and monetary value of sustainability-linked facilities extended in 2023.

The total monetary value of social financing increased by 7% in 2023. Green mortgages to SLLs also increased in developed markets, including the US, France and Singapore. NBK has been expanding its retail business to offer consumers innovative financing solutions to adopt sustainable behaviors and lifestyles by providing electric vehicles and eco-friendly home loans.                        —Gilly Wright

According to SEB Group’s green bonds report, green bond issuance is expected to increase by up to 20% globally this year, and “North America and corporations will be the main drivers of growth in 2024.”

Why North America? Under the administration of US President Joe Biden, the Inflation Reduction Act was signed into law in August 2022, “but it came into force only last year,” Gregor Vulturius, SEB’s lead scientist and adviser on climate and sustainable finance, tells Global Finance. That is, the “shiny new factories” will be showing up only this year and next; and of course, they will need financing.

It’s not as if the region underperformed last year, either. North America was up 80% in 2023 green bond issuance, which was in “a suffering bond market,” Vulturius notes.

Canada’s Scotiabank has an ambitious goal: to mobilize $350 billion to reduce the impacts of climate change by 2030. It reached $130 billion by the fiscal end of 2023, up from $96 billion in 2022—not too bad, given a relatively flat year for sustainable finance globally. ESG bonds accounted for 13.6% of the bank’s overall bond volume, a big jump from only 3% in 2022.

Scotia doesn’t confine itself to North America, either. According to Bloomberg, it was Latin America’s second-leading bookrunner for green, social, sustainable and other labeled bonds in 2023, with a 21% market share. In May, Scotia acted as ESG distributor for the United Mexican States’ Sustainable Sovereign Bond issuance, where demand reached approximately $1 billion.

The bank is active with various impact bonds, including SLBs. It was a sustainability structuring agent for Bell Canada, Canada’s largest communications company, when it added sustainability-linked pricing to its securitization program in September 2023. In June, Scotia also advised the Republic of Chile on its dollar and euro SLB offerings.

Elsewhere, Scotia supported Mexico’s Comisión Federal de Electricidad as joint bookrunner in a June 2023 social bond issuance and played a similar role for Canadian real estate firm Ivanhoe Cambridge for that firm’s inaugural sustainability bond. On the loan side of the ledger, Scotia tallied 67 ESG-loan deals between January 1 and October 31, 2023, with a total volume of CA$7.7 billion.

Finally, Scotiabank has committed to clear, open and detailed sustainability reporting—and once again takes North American honors for transparency. It developed and abided by four transparency principles that guide its net-zero strategy, and the bank regularly publishes its numeric progress toward achieving long-term goals.

Canada’s CIBC figured prominently in sustainable and project infrastructure finance in 2023. In June 2023, the bank co-led a syndicate of underwriters for Northland Power’s CA$500 million fixed-to-fixed-rate green subordinated notes issuance. The power company will use the proceeds for green projects, including an offshore wind farm in Poland and an energy storage project in Ontario, Canada.

CIBC was also the lead arranger and administrative agent for the AES Clean Energy Master Indenture Structure warehouse upsizing. The $2.7 billion refinancing project, which happened in May 2023, included 25 banks and was the largest debt financing for a US renewables transaction.

The bank’s prowess for green and sustainable bond underwriting was already described in the global awards above, but the bank was also a standout in SLLs in 2023. It was Canada’s top bookrunner, with a 25% market share according to Bloomberg, and it acted as sole bookrunner, lead arranger and sustainability structuring agent for $700 million FortisBC Energy’s revolver financing—with a performance target for Scope 3 emissions as well as a social target aimed at protecting Canada’s indigenous population.

Additionally, CIBC was a joint bookrunner for Enbridge’s $900 million sustainability-linked notes, OMERS Realty Corporation’s $600 million green debentures, and Sun Life Financial’s $500 million sustainable subordinated debentures offerings over the past year.           —Andrew Singer

Green bonds dominate sustainable finance, and Western Europe dominates green bonds. The world’s top three banks in green bonds and loans in 2023 were Western European—BNP Paribas, Credit Agricole and HSBC, according to Bloomberg data—while year-end green bond issuance in Europe outclassed its closest regional rival, Asia-Pacific, $243.75 billion to $174.2 billion, according to Climate Bonds Initiative data.

Looking ahead, falling EU interest rates and new standards for green bond issuances bode well for 2024 and beyond. On the punitive side, European banks could encounter new fines and higher capital requirements if they delay implementing green transition plans too long. More European banks, too, are imposing internal restrictions on their fossil-fuel sector financing.

For CaixaBank, sustainable finance is about more than reducing greenhouse gas emissions. It also entails a strong social commitment, such as boosting financial inclusion through its microfinance bank, Europe’s largest; or issuing social bonds, a bond type that some other banks abandoned after the Covid-19 crisis.

Indeed, when CaixaBank closed on its fifth social bond, in May 2023, that €1 billion debt instrument focused on education and health care was oversubscribed by €750 million.

CaixaBank is also a leader on ESG-related loans. It ranked third globally, according to Refinitiv, and was first in Europe in the first half of 2023, providing $11.65 billion in financing through 57 transactions.

The bank also brings some resourcefulness to its deals. As sustainability coordinator for Acciona Energía’s €750 million green financing in November 2023, the bank incorporated a local impact indicator in which participating companies committed to planting 26,000 trees per year (collectively) during the financing’s term.

LGT Group, Liechtenstein’s royal family-owned private banking and asset management group, began to embed sustainability-oriented clauses in its investment programs decades ago. It makes a point of publishing the extent to which its investments meet sustainability criteria.

As of June 30, 2023, the group had invested 54.5 billion Swiss francs (about $62 billion) in sustainable investment solutions globally, representing 36% of LGT’s total assets under management. That was up from 34.8% at year-end 2022. Moreover, 80% of LGT’s discretionary mandates in Europe, the Middle East, Africa and Asia now meet the EU’s Article 8 sustainability requirements, which qualify as “light-green” funds that “promote investments or projects with positive environmental or social qualities, or a combination of such characteristics, as long as the investments are made in enterprises that adhere to sound governance practices.”

The Netherlands’ ING was 12th globally among green bond bookrunners in 2023, according to cbonds.com, and many of those issuances were in Western Europe. In June 2023, for instance, ING acted as sole structurer and joint active bookrunner on Anglian Water’s £860 million (about $1.1 billion) dual-tranche green bond issuance to help meet that water and sewerage company’s capital expenditures.

In infrastructure finance, ING played multiple roles, including sole underwriter and mandated lead arranger, in AtlasEdge’s plans to expand sustainable data centers across Europe. The company raised €525 million in committed debt financing and a further €200 million uncommitted accordion facility. The 2023 sustainability-linked financing includes KPIs to ensure the new data centers use renewable energy.

ING is a veteran of sustainable project finance, too. As sustainability coordinator for Baltic Power’s offshore wind farm project and its €4.1 billion multibank credit facility, for instance, ING helped ensure that financing aligned with the Loan Syndications and Trading Association’s Green Loan Principles and the International Capital Market Association’s Green Bond Principles. Baltic Power will be the world’s first to use low-emission steel produced almost entirely from recycled raw material.

Societe Generale (SocGen) SLBs lost momentum in 2023, but SocGen stayed the course, acting as structuring adviser and joint bookrunner for the Republic of Chile’s €750 million SLB issuance in June. SocGen was also the sole structuring adviser in the UK’s Heathrow Airport €650 million SLB, with its separate performance targets for slashing carbon emissions “in the air” and “on the ground.”

As noted in the Global Winners section, according to Natixis, SocGen is one of the only commercial (i.e., nondevelopmental) banks that has ever issued green, social and sustainable bonds. In September 2023, SocGen was the global coordinator for French real estate development and investment company Praemia Healthcare’s €500 million sustainability bond. Proceeds will finance green and social assets—including medical and eldercare facilities.

SocGen has been a perennial supporter of sustainable finance projects in the emerging world, and 2023 was no different. In Central and West Africa, it partnered with Afrigreen, a debt investment fund, to support the decarbonization of local companies, raising €87.5 million. In contrast, in Kazakhstan, the bank supported the development of green mobility as global coordinator and mandated lead arranger for the €627 million financing of 105 electric locomotives to be used in that Central Asian nation, among other projects.

Finland’s Nordea kept its innovative skills sharp in 2023, introducing its second sustainability-linked loan bond, or SLLB, at the end of August. The €1 billion issuance followed the first-ever SLLB (€370 million) launch in late 2022. This hybrid instrument uses standard use-of-proceeds bonds to fund a portfolio of SLLs, though with no coupon adjustment for investors. The bank absorbs any performance shortfall.

Overall, SLLs at Nordea were up 30% in the first three quarters of 2023 compared to 2022, and the bank ranked top in SLLs in the Nordic region, according to Bloomberg.        —AS