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, 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 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 (photo), 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.