Agreement between BRD and IFC for the financing of sustainable projects and SMEs

George Marinescu
English Section / 5 aprilie

Maria Rousseva, CEO BRD Groupe Societe Generale, and Makhtar Diop, Managing Director of IFC

Maria Rousseva, CEO BRD Groupe Societe Generale, and Makhtar Diop, Managing Director of IFC

Versiunea în limba română

BRD and IFC concluded a reference transaction of synthetic transfer of significant risks (SRT) The value guaranteed by IFC amounts to 700 million euros I n return, BRD will grant loans of 315 million euros for the financing of sustainable projects submitted by SMEs It is the first SRT transaction in Romania for both IFC and BRD

BRD Groupe Societe Generale and the International Finance Corporation (IFC), a member of the World Bank Group, concluded, yesterday, a landmark synthetic significant risk transfer (SRT) transaction, which will release capital with the help of which BRD will accelerate the financing of sustainable projects with impact in Romania. As part of the transaction, IFC will provide a risk guarantee for a BRD portfolio of up to EUR 700 million comprising loans for SMEs and financing for large companies. The capital released through the SRT transaction will allow the bank to grant loans worth up to 315 million euros to finance climate-related initiatives and to support female entrepreneurship in our country.

SRT transactions are capital management tools widely used by banks. IFC played a key role in introducing them to emerging markets, including Central and Eastern Europe. The capital resources released by such transactions can be reallocated to finance projects with a strong development impact.

The transaction initialed yesterday is part of the agreement signed at the beginning of 2024 between Societe Generale and IFC to strengthen the collaboration between the two institutions in order to accelerate the support given to sustainable financing projects. While the Societe Generale group already uses SRT that redistributes capital to sustainability-related credits, this is the first time that BRD has resorted to such an instrument.

Maria Rousseva, CEO of BRD Groupe Societe Generale, said: "BRD is dedicated to building a sustainable economy in Romania, and ESG commitments are at the heart of our strategy. We have demonstrated this in recent years through the ever-stronger growth of positive impact funding. We are delighted to be working with IFC on this new agreement which will allow us to accelerate our development in this important area. We are talking about a significant transfer that takes an important part of the risk in order to release more capital to finance the Romanian economy. (...) Projects related to the green transition, innovative projects will be financed and female entrepreneurship will be supported. Our plan is that in the next two and a half years we will invest the first 315 million euros in green projects, in projects related to the energy transition, in supporting SMEs, but also in blue financing, i.e. in innovative projects regarding water purification, such as and in infrastructure, tourism and manufacturing projects related to water use".

Maria Rousseva stated that once this new financial instrument is developed, BRD will increase the portfolio intended to support the sustainable economy, in order to finance as many projects of the business environment in our country as possible.

Makhtar Diop, Managing Director of IFC, said: "This transaction marks an important moment in our long-standing partnership with Societe Generale, demonstrating our shared commitment to developing innovative financing solutions. Through this SRT agreement - a first for both IFC and BRD in Romania - we are investing in the country's future to accelerate sustainable and inclusive economic growth. We are talking about a complex product, perfectly adapted to emerging capital markets. It is an innovative financial instrument that has been tested on other capital markets and, once developed, the bank can increase the funds allocated for lending to companies in order to finance sustainable projects. We can practically talk today about the first sustainability bond in Romania. Our goal is to keep the Earth as safe and green as possible."

This SRT deal is one of two key IFC deals aimed at catalyzing Romania's green transition, increasing financial inclusion and boosting sustainable growth, announced during Makhtar Diop's first visit to Romania this week.

BRD has a history of success in sustainable financing, with credits exceeding 800 million euros in the last three years and the organization of two editions of the Climate Change Summit in Romania.

BRD Groupe Societe Generale operates a network of 423 units, and its total assets amounted, at the end of December 2023, to 81.4 billion lei. BRD is part of Societe Generale, one of the most important European banks, with more than 126,000 employees serving approximately 25 million customers in 65 countries around the world. The group leads three complementary business lines, which include ESG offers for all types of clients:

- Retail banking, private banking and insurance services in France

- Global banking and solutions for investors

- International retail banking, mobility and leasing services

The International Finance Corporation (IFC) - a member of the World Bank Group - is the largest global development institution focused on the private sector in emerging markets. IFC is present in more than 100 countries, using its own capital, know-how and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private enterprises and financial institutions in developing countries, supporting the private sector in its efforts to end extreme poverty and increase prosperity in the context of which economies face the impact of complex global crises.

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