To help expand climate finance while strengthening Romania’s banking system and capital markets, IFC is investing 100 million euro in the green bonds issuance of Banca Comercială Română S.A. (BCR), a member of the Erste Group and the second largest bank in the country.

This is the largest benchmark-size euro bond issued by a Romanian financial institution in the international market, and BCR’s seventh senior non-preferred bond issuance. The bonds qualify for the European Union’s (EU’s) Minimum Requirement for own funds and Eligible Liabilities (MREL), one of the key tools to enhance banks’ resilience, introduced by the European Commission in 2016 and enforced by the National Bank of Romania. This is also BCR’s third green bond issuance under the Erste Group Sustainable Finance Framework. The proceeds from IFC’s investment will be channeled toward renewable energy, green mortgages, and green building projects.

“New green Eurobond issuance marks our commitment towards the ESG performance, which is set to be a guiding light in today’s ever-changing business environment. At BCR, we prioritize funding sources diversification, and capital markets play a key role in activating private capital for the sectors that drive sustainable economic development,” said Sergiu Manea, CEO Banca Comercială Română. “Moreover, we are pleased to have IFC as a long-term partner, with a common approach on growing and guiding the business environment for a new economic cycle. Our aim is to be a catalyst for Romania’s development by powering green and sustainable projects that benefit the environment, communities, and life quality.

Climate mitigation is an urgent priority for Romania. As of 2019, Romania had the fifth-highest greenhouse-gas (GHG) emissions intensity among the EU countries. The Russian invasion of Ukraine further highlights the urgency of implementing energy savings measures across the region. Romania is estimated to need $150 billion to meet its climate change mitigation goals.

“Moving forward, the banking sector will need to play a key role to finance the country’s green transition for which billions are needed across retail investments, small and medium businesses, farmers, and also larger projects,” said Ary Naïm, IFC’s Regional Manager for Central and Southeast Europe. ”In alignment with our previous investments in BCR’s bonds, this investment is aimed at further strengthening the bank’s resilience. While fostering Romania’s capital markets development, IFC expects the funding to catalyze market changes and encourage replication by other players.”

A long-standing client since 2003, IFC has partnered with BCR to support on-lending to small and medium enterprises, and also increase agribusiness financing and housing finance, including green mortgages.