UOB enters tie-up with Korea Housing Finance

A South Korean 10,000 won note. Photo by Minho Jeong on UnsplashA South Korean 10,000 won note. Photo by Minho Jeong on Unsplash

UOB has signed a memorandum of understanding (MOU) with Korea Housing Finance Corp. (KHFC) to cooperate on investment banking, environmental, social and governance (ESG) financing and treasury services, the Singapore bank said last week.

The South Korean state-owned financial company and UOB will work to expand KHFC’s footprint in Southeast Asia, including Singapore, Indonesia, Malaysia, Vietnam and Thailand, UOB said in a press release on its website.

The two will cooperate on issuing regular and covered bonds, while UOB will support KHFC in expanding its investor base for its mortgage-backed securities (MBS), under the ESG financing frameworks, the release said.

Choi Joon Woo, chairman and CEO of KHFC, said in the statement: “We appreciate UOB’s innovative entrepreneurship in the financial markets including its investment in Korean-won denominated social MBS issued by KHFC as the first foreign investor.  This MOU reconfirms strong collaboration between two institutions and we look forward to working with UOB as reliable key partner as KHFC plans to grow social MBS investors from the ASEAN region.”

In addition, UOB will provide KHFC with treasury services, such as derivatives for hedging foreign exchange risk, and will offer cash management services to KHFC’s newly opened Singapore branch office, its first overseas venture, the release said.

UOB said it started working with KHFC in 2019, when it set up its financial institution unit in South Korea, and in 2020, the Singapore bank invested in KHFC’s first South Korean won-denominated social MBS. The social MBS, previously only available in South Korea’s market, was able to reach foreign investors due to UOB’s investment, the release said.

The Korea Housing Finance Corp. is a South Korean state-run enterprise facilitating the supply of housing funds for low- and middle-income families as well as securitising mortgage-backed claims and other instruments.