Sustainable finance in Romania gets a boost from IFC and BRD
On 19th January 2024, Societe Generale and IFC, a member of the World Bank Group, signed a Collaboration Framework Agreement to accelerate their support for sustainable finance projects.
This agreement illustrates both institutions’ shared ambition to contribute to the UN Sustainable Development Goals (SDGs) and strong commitment to the environmental transition and sustainability. The two institutions aim to further develop wide-ranging financing solutions such as project co-financings or risk sharing agreements, contributing to private sector mobilisation in support of the climate transition.
On Thursday 4th April 2024, BRD, the Group’s subsidiary in Romania, and IFC announced the closing of a landmark synthetic risk transfer (SRT) transaction that will free up capital for BRD to boost the financing of impactful sustainability-related projects in Romania.
BRD is committed to contributing to a more sustainable economy in Romania and environmental, social and governance commitments are at the heart of their strategy. They have demonstrated this in recent years by delivering growing momentum in positive impact finance. Partnering with IFC on this new agreement will enable BRD to accelerate its expansion in this important area.
Under the transaction, IFC will provide a risk guarantee on an up to €700 million BRD portfolio of small and medium enterprise (SME) and corporate loans. Capital freed up by the SRT will enable the bank to lend up to €315 million to fund climate-related initiatives and women-owned smaller businesses.
SRTs are a widely used capital management tool for banks. IFC has played a key role in their introduction in emerging markets, including Central and Eastern Europe. While Societe Generale Group is already a user of SRTs redeploying capital to sustainability-related lending, this is a first time that BRD resorts to such an instrument.
Capital resources freed up by such transactions can be reallocated toward financing projects with strong developmental impact.
This transaction marks an important milestone in our longstanding partnership with Societe Generale, showcasing our shared commitment to developing innovative financing solutions. With this SRT—a first in Romania for both IFC and BRD—we are investing in the country’s future to accelerate sustainable and inclusive economic growth.
I am delighted to engage in this cooperation with IFC by the signing of this Synthetic Risk Transfer transaction and the related advisory support. BRD is highly committed in building a sustainable economy in Romania. For several years already, ESG commitments are at the core of our bank’s strategy. We proved it in the recent years by delivering a growing momentum in positive impact finance. This new agreement will enable BRD to accelerate expansion in this field, with the support of highly recognised experts.