April 4 (SeeNews) - Romanian bank BRD [BSE:BRD] and International Finance Corporation (IFC) said on Thursday they closed a synthetic significant risk transfer (SRT) deal through which BRD's portfolio of small and medium enterprise (SME) and corporate loans will receive a risk guarantee of up to 700 million euro ($760.3 million).
Having capital freed up through the SRT will allow BRD, part of France’s Societe Generale Group, to lend up to 315 million euro to finance climate-related projects and women-owned smaller businesses, BRD and IFC, the private sector arm of the World Bank Group, said in a joint press release.
The deal is the first SRT for both IFC and BRD in Romania.
"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. Capital resources freed up by such transactions can be reallocated toward financing projects with strong developmental impact," BRD explained.
This transaction is part of a broader initiative agreed upon by IFC and Societe Generale Group earlier this year to increase their collaboration in financing sustainable projects. According to the press release, BRD has invested more than 800 million euro in sustainable financing over the last three years.
In 2023, the Romanian lender booked a preliminary net profit of 1.634 billion lei ($357.1 million/328.8 million euro), up from 1.286 billion lei in 2022. Its net banking income increased to 3.722 billion lei last year from 3.288 billion lei in the previous year.
BRD shares traded 1.14% lower at 21.75 lei as at 1551 CET on Thursday on the Bucharest Stock Exchange.
($=0.9206 euro)
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