Washington D.C., June 13, 2005—
The International Finance Corporation, the private sector arm of the World Bank Group, is providing a financing package of around $45 million equivalent to Banca Transilvania in an agreement signed today in Bucharest by Ana Maria Mihaescu, IFC’s chief of mission in Romania, and Robert C. Rekkers, director general of Banca Transilvania.
IFC will be the lead investor in a bond issue by Banca Transilvania, by subscribing to $20 million subordinated convertible bonds of a $25 million issue. IFC is also providing Banca Transilvania with a Euro 20 million loan to help expand the housing finance market in Romania.
The bonds will be convertible into the common shares of Banca Transilvania. They represent a new instrument of significant importance for Romania’s banking sector, as this is the first time that a locally owned bank will raise subordinated capital through a public offering.
IFC’s funding will also give further momentum to the bank’s mortgage lending operations, which currently exceed $100 million and account for 10 percent of the country’s mortgage market. The loan is part of IFC's wider strategy to develop housing finance through mortgage origination.
Jyrki Koskelo, IFC's Director for Global Financial Markets noted, “We are pleased to support Banca Transilvania in launching its convertible subordinated bond, not only the first bond issued by BT, but also the first instrument of its kind in Romania. The bond will strengthen the capital of Banca Transilvania. It paves way for other Romanian banks to tap public markets to raise subordinated capital in the future and facilitates the creation of deeper and broader capital markets in Romania.”
Robert Rekkers, Banca Transilvania's director general, said, “Today IFC became one of the strategic partners of Banca Transilvania, supporting not only our lending activity, through the mortgage designated credit line, but our bank’s whole development process, by helping strengthen our capital base. With IFC's assistance, we managed to prepare the first issue of foreign currency subordinated convertible bonds in Romania."
Ana Maria Mihaescu, chief of IFC’s mission in Romania, added, “This transaction highlights IFC’s continued support to strengthening the local banking sector and our commitment to reliable local partners. The loan included in the funding package is IFC’s second mortgage loan to Banca Transilvania. It addresses the demand for better quality housing in this market.”
Banca Transilvania
is part of
the Banca Transilvania Financial Group. In the 11 years since its inception, it has grown into a large financial institution, with more than 150 business units and over 2,400 employees. The bank’s market share has increased continuously, and Banca Transilvania is now one of the country’s 10 largest banks. In 2004, it was named “The Bank of the Year” by “Piata Financiara” magazine.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
