Lloyds bank to give £1bn loan boost to efficiency schemes

A new £1bn fund aimed at helping owners of commercial real estate improve the energy efficiency of their buildings has been launched by Lloyds Banking Group.

The bank, which will give loans totalling a minimum of £10m to each of its clients in order to support efforts to reduce their energy consumption, anticipates an estimated 110,000 tonne reduction in carbon emissions as a result of the scheme, equating to the annual energy use of more than 22,000 homes.

The fund is claimed to be a first for the industry, with Lloyds Bank stating that a typical loan would be for between £50 million and £100 million in order to support sustainability and efficiency programs, with some industry experts suggesting the scheme could be targeted at firms affected by ESOS regulations.

Interested companies will be required to undergo an eligibility test and lender performance in the test will determine how preferential rates will be, with the loans offering discounts of up to 20 basis points below the bank’s agreed price.

John Feeney, global head of commercial real estate at Lloyds Bank, emphasises how environmental issues have rapidly come up on the companies agenda.

“What it comes back to is that more and more capital is coming from sovereign wealth funds, or pension funds, and they’re under pressure from people who invest in those, or their citizens, to do more in an environmental sense. I expect other lenders to follow our lead as the appetite for green financial products increases,” he said.

Lloyds bank hopes it will spark interest from investors for sustainable fixed income products for the UK market, such as green bonds, with its most recent scheme coming after analysis from HSBC last year revealed that the global green bond market is now estimated to be worth almost $600bn.

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