KUALA LUMPUR: RHB Banking Group has launched Malaysia's first sustainable use-of-proceeds (UOP) cross-currency repurchase (repo) transaction.

In a statement, the group credited its collaboration with BNP Paribas Malaysia Bhd for enabling the UOP repo through the development of Malaysia's first sustainable UOP annexe.

It said the transaction, involving a cross-currency Australian dollar (AUD) for Malaysian ringgit bonds repo, is designed to support businesses transitioning to sustainability.

"The ringgit proceeds will be allocated to eligible small and medium enterprises (SMEs) loans that meet approved sustainability criteria," RHB said.

It said RHB and BNP Paribas aim to generate competitively priced liquidity to support sustainable lending in Malaysia and internationally by leveraging sovereign and sovereign-related securities from sukuk and bond portfolios.

RHB's Group Wholesale Banking managing director, Datuk Fad'l Mohamed, said the bank is committed to driving innovation in sustainable and transition finance, which are crucial for supporting its clients' shift towards a more sustainable future.

"This initiative is a key step towards achieving our ambition of mobilising RM50 billion in sustainable financial services, advancing our Net Zero 2050 aspirations, and making a positive impact on the communities we serve," he added.

The banking group said it has made significant progress towards its RM50 billion sustainable finance goal by 2026, reinforcing its commitment to supporting businesses' transition to low-carbon practices.

"Having mobilised over RM31 billion to date, 62 per cent of its 2026 target, RHB positions itself as a catalyst for sustainable business and a leader in advancing a low-carbon future," according to the bank's statement.