SC Bank Korea inks sustainable financing deals with POSCO Chemical, L&F

The logo of Standard Chartered (SC) Bank Korea is seen on its branch office in Seoul in this undated photo. Korea Times file

By Yi Whan-woo

Standard Chartered (SC) Bank Korea said Thursday it signed trade receivables discounting (TRD) deals with POSCO Chemical and L&F, as part its efforts to support their green campaigns.

TRD is a mechanism for boosting sustainability in trade finance, in which a seller or a supplier provides its products to a buyer and assigns the accounts receivables to a bank. In return, the bank makes payments to the seller in advance and receives payments from the buyer at a later date.

It generally takes months for a seller to receive payment after supplying goods. But TRD can shorten the payment period, enabling the seller to receive payments early and increase sales efficiency.

The mechanism is in line with the global bandwagon for environmental, social and corporate governance (ESG) management.

POSCO Chemical and L&F are both suppliers of electric battery (EV) materials, with the former being the secondary battery materials arm of steel giant POSCO and the latter being recognized as a promising medium-sized enterprise.

The TRD agreements, worth $80 million for POSCO Chemical and $100 million for L&F, are expected to secure a sustainable supply of cathodes needed to make EV batteries.

“We will develop a wide range of financial solutions to help remove the financial barriers preventing the transition to net zero and ensure clients can transit to more eco-friendly industries,” SC Bank Korea CEO Park Jong-bok said.

The CEO went on to say that ESG management and the transition to net zero are mandatory for all businesses including SC Bank Korea.

TRD deals are categorized as eco-friendly transactions and certified as sustainable finance by the Standard Chartered Group, the London-headquartered multinational financial services company under which SC Bank Korea operates.