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The issue of green bonds last month by two Chinese financial institutions showed that local investment organizations are actively looking for opportunities in sectors focused on sustainable development.

Industrial Bank Co

Ltd, a leading commercial lender in green finance based in Southeast China's Fujian province, issued a three-year green bond worth 10 billion yuan ($1.52 billion) at a coupon rate of 2.95 percent annually.

It followed Shanghai Pudong Development Bank Co Ltd, a mid-sized lender, raising 20 billion yuan in China's first domestic green bond offer at the same coupon rate to support clean energy and environmental protection. The sale of the three-year bond attracted orders that were twice the size of the offer.

In December, the People's Bank of China, the central bank, posted a notice on its website, establishing an institutional framework for green bond issuance in the interbank bond market.

Analysts expect this increasing amount of "green financing" via bond issuance will help commercial banks hedge against the downward pressure being felt in traditional lending businesses, and they hope it will become a new growth driver for the Chinese banking sector.

Lending pressure has intensified due to multiple factors, including China's interest rate liberalization, economic slowdown, and growing competition from Internet finance companies.

A recent survey of 1,328 bankers from 116 financial institutions nationwide found optimism was low that profits will improve over the next three years, with the vast majority expecting single-digit annual growth.

Chen Yaqin, deputy director of market development at Industrial Bank's environmental finance department, said: "Under the current circumstances, banks are seeking opportunities in sectors that are likely to be unaffected when the economy is on a downward curve.

"Many commercial lenders have shown great interest in green bonds, as they turn their eyes toward projects related to a low-carbon, circular and ecological economy."

Both Industrial Bank and Shanghai Pudong Development Bank are approved to issue green bonds worth no more than 50 billion yuan in China's interbank bond market.

And Chen said more banks are waiting in line for similar regulatory approval.

Fang Zhiyong, Industrial Bank's general manager of environmental finance, told a seminar in Beijing on Tuesday: "Green bonds are an important source of capital and will help financial institutions increase their lending to eco-friendly projects and give effective, targeted support to green industries amid China's industrial restructuring and upgrading."

At the end of 2014, outstanding green lending by 21 major banks in China exceeded 6 trillion yuan, accounting for about 9 percent of their total loans, said a report of the China Banking Association.

Ma Jun, chief economist of the research bureau at the central bank, told the seminar: "Projects supporting a low-carbon economy used to rely on bank loans for financing. But these had their limitations because the average term of lending was only six months.

"Green projects, on the contrary, usually need a large amount of long-term capital, and with green bonds we have a new channel of financing for these projects."