NatWest Launches €1 Billion Inaugural Affordable Housing Social Bond


UK banking group NatWest announced earlier this week it has issued a €1 billion affordable housing social bond. The bank reported it has selected a pool of loans to not-for-profit, registered UK-based housing associations to which it will allocate the proceeds of the bond’s issuance. 

NatWest Group CEO, Alison Rose, shared more details about the bond by stating:

 “The launch of our inaugural affordable housing social bond reinforces our pledge to provide £3bn of funding to the affordable housing sector by the end of 2022. The proceeds from this bond will help fund the provision of affordable housing in the UK, resulting in positive social impacts and helping to reduce inequalities in communities across the country, a number of which have been severely impacted as a result of the pandemic. As the third bond issued from our Green, Social and Sustainability Bond Framework, it helps to underline our commitment to the green and social sectors.”

NatWest further revealed that the issuance includes allocation of proceeds to both new and existing lending, with full allocation expected over the next 12 months. The bank will then issue an impact assessment report on and at least annually thereafter, in line with the International Capital Markets Association standards. This is the third issuance under NatWest’s GSS Framework, which provides a basis for the future issuance of Green, Social or Sustainability Bonds. The bank added:

In November 2019, the bank issued its first social bond, which was linked to the bank’s ~£2.5bn of existing lending to small and medium-sized enterprises operating in areas of the UK with the highest levels of unemployment and lowest job creation. That bond’s July interim impact report revealed the creation of ~7,000 jobs supporting on average 2,750 SMEs, over the life of the issuance. In May 2020, NatWest issued its first green bond, with proceeds allocated to 13 Renewable Energy Projects across the UK.”

The launch of the bonds comes less than a month after NatWest announced an additional £1 billion in funding to help support female-led businesses in the UK recover from the COVID-19 pandemic, bringing total funding £2 billion. At the time, NatWest stated:

Due to the extraordinary impacts of the coronavirus the bank has seen unprecedented demand from female-led businesses and has exceeded £1bn of lending in under 12 months. The impacts of the coronavirus combined with the availability and ease of access through digital channels of Government lending schemes, has led to many more female entrepreneurs applying for funding.”

NatWest further revealed that the NatWest’s share of lending to female founders has not only increased in absolute terms but proportionately rising from 9.5% to 14% of total lending. NatWest added it has also committed to helping create an additional 35,000 new businesses in the UK by the end of 2021, focusing its efforts on underrepresented groups and geographical inequality.

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