A targeted IFC investment aims to increase access to residential mortgages in Romania while helping mitigate climate change and strengthen the country’s banking sector. IFC is providing EUR 100 million to Banca Transilvania (BT), the largest bank in the country, as part of a EUR 200 million subordinated debt financing package alongside the Asian Infrastructure Investment Bank (AIIB).

This financing initiative addresses challenges stemming from the country’s outdated, inadequate, and energy-inefficient housing supply. It will expand housing finance options and improve living conditions by encouraging the supply of more efficient and environmentally friendly housing.

“The new financing facility organized by IFC helps us intensify our financing efforts in areas of interest for the transition to a sustainable economy in Romania. Thus, directing the obtained funds towards energy-efficient mortgages will decrease energy consumption and greenhouse gas emissions while ensuring improved housing conditions,” said Ӧmer Tetik, CEO of Banca Transilvania.

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Ranking fifth highest in greenhouse gas emissions among EU countries and 42^nd globally, Romania needs to take urgent action to reduce its carbon footprint, green its housing stock, and improve air quality and energy efficiency. The investment from IFC will be primarily dedicated to residential mortgage financing, with a minimum of 80 percent allocated to green mortgages.

The subordinated debt, to be listed on the Bucharest Stock Exchange, adheres to the regulatory frameworks of Basel III, as well as of the EU and Romania. By serving as Tier 2 capital, the hybrid capital instrument will help enhance BT’s resilience and bolster Romania’s banking sector.

“Private sector investment is critical to increasing access to affordable housing finance,” said Marcelo Castellanos, IFC’s Senior Regional Industry Manager, Financial Institutions Group, for Europe. “We aim to address the housing problem in Romania with our long-term partner BT while helping the country achieve its climate mitigation targets through improved household energy efficiency.”

Since 2004, IFC’s partnership with Banca Transilvania has led to 14 investments and three advisory projects.