Sumitomo Mitsui Banking (SMBC) and Citigroup are among banks targeting new deals in the market for blended finance, defying a number of headwinds, including a significant decline in government spending on development aid.
Deals blending public and private funds totaled $18 billion last year, down 21% from 2023, according to Convergence, a global network of more than 190 institutions and a data provider for blended finance. Over the past three years, banks doing the most blended-finance transactions include SMBC, Citigroup, BNP Paribas and Mitsubishi UFJ Financial Group, it said in a report released Wednesday.
The deals tend to target environmental and social goals, and rely on public de-risking tools such as guarantees to attract private capital. With climate-focused transactions making up more than 60% of total financing last year, blended finance has been touted as key to raising the $300 billion in annual contributions pledged by countries at the COP29 climate summit in Baku, Azerbaijan, last year.
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