THE Royal Bank of Scotland has hailed the issue of its inaugural social bond, the first of its kind by a UK financial institution.

The bank said the issuance raised £650 million and the social bond highlights the bank’s plans towards tackling regional inequality through lending provided to SMEs in deprived areas of the UK.

It provides a basis for the future issuance of green or sustainability bonds.

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Taking data from the Office for National Statistics, the bond is linked to the bank’s £2.5 billion of existing lending to small and medium-sized enterprises operating in the areas of the UK with the highest levels of unemployment and lowest job creation.

Using a standardised methodology, the bank will provide an impact report to investors at least annually, which will measure the jobs created and retained as a result of the lending.

Alison Rose, RBS chief executive, said the move is “an important milestone for RBS as we build a more sustainable, purpose-led bank that champions the communities we serve”.

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She said: “There was strong demand for this bond, with institutional investors increasingly targeting socially useful lending and opportunities to track and measure the impact of their investments.”

Simon Howard, chief executive of the UK Sustainable Investment and Finance Association, said: “All financial institutions must be pro-active in delivering fairer society, and all must report transparently on what they are doing. RBS’s wider framework, and the bond with its reporting commitments, are examples of what must become standard behaviours.”