Bucharest, Romania, May 12, 2021—The first ever green bond to be issued by a financial institution in Romania will boost access to climate finance and help enhance the resilience of the banking sector while strengthening the country's capital markets.
IFC is investing $20 million equivalent in local currency bonds, placed by Raiffeisen Bank S.A. (RBRO), a systemic bank in Romania. While this landmark investment is the first issuance of a green bond by a financial institution in the country, it is also IFC's first investment in bonds that are expected to qualify for the European Union's Minimum Requirement for own funds and Eligible Liabilities (MREL), being only the second issuance of such bonds in Romania.
While the bonds have been issued in compliance with RBRO's Green Bond Framework, 100 percent of the proceeds—including IFC's investment—will be used only for eligible climate finance projects in five key areas: green buildings, renewable energy, energy efficiency, clean transportation, and sustainable agriculture.
"Through this inaugural green bond issue we want to reaffirm our commitment to the development of sustainable and prosperous communities by allocating resources for projects that generate value for society as a whole and have a positive social and environmental impact" said Steven Van Groningen, RBRO's President and CEO.
The bonds will have features expected to ensure MREL-eligibility under the National Bank of Romania's application of the European Bank Recovery and Resolution Directive (BRRD) framework. Further, they will support RBRO in achieving the targeted cushion for own funds and eligible liabilities, which enhances the RBRO's stability as a systemic financial institution in Romania. The concept of MREL was introduced to increase banks' resilience and to ensure that banks have enough loss-absorbing and recapitalization capacity in case of a bail-in.
"Building on our long-term partnership with RBRO, our target is to boost the financing of green projects in Romania and help the country meet its climate goals," said Vittorio Di Bello, IFC's Regional Head of Industry for Financial Institutions in Europe and Central Asia. "In addition, the MREL-eligibility of the bonds will help bolster the banking system, paving the way for more diversified financial instruments in Romania's capital markets."
An IFC client since 2004, RBRO is a member of the Raiffeisen Group (RBI). The financing builds on IFC's existing relationship with both RBRO and RBI and expands IFC's engagement with RBRO in the climate-finance space.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit http://www.ifc.org
RBRO is a subsidiary of Raiffeisen Bank International (RBI) and is one of the systemic banks in Romania. The Bank, currently ranked fourth by net loans with a 10 percent market share (as of December 31, 2020), has an extended history on the local market and offers a wide range of banking services with a nationwide presence. As of December 31, 2020, RBRO served 2.18 million clients, with over 4,900 employees and 333 outlets. The Bank holds a Long-Term Counterparty Risk Rating and a Long-Term Deposit rating of Baa1/negative outlook from Moody's.