IFC, a member of the World Bank Group, has closed a landmark significant risk transfer (SRT) contract in Romania with BRD Groupe Societe Generale (BRD-SocGen) – under which the former (IFC) insures, against a fee, part of the risk associated with a portfolio of loans that the latter (BRD-SocGen) is extending and may reach up to EUR 700 million.
With this SRT contract, IFC seeks to support Romania’s green transition, boosting financial inclusion, and driving sustainable growth, said Makhtar Diop, IFC’s Managing Director.
The SRT instrument was designed before the COVID-19 crisis but is increasingly adopted by markets today. The specific SRT contract with IFC will allow BRD-SocGen to extend EUR 700 million of loans more, compared to the limitations implied by its capital.
IFC says it has played a key role in the introduction of SRT instruments in emerging markets, including Central and Eastern Europe.
The portfolio subject to the SRT contract with BRD-SocGen can include small and medium enterprise (SME) loans as well as corporate loans.
Capital freed up by the SRT will enable the bank to lend up to EUR 315 million to fund climate-related initiatives and women-owned smaller businesses, the press release published by IFC explains.
This transaction is part of the agreement signed in early 2024 between Societe Generale Group and IFC to strengthen collaboration between the two institutions to accelerate their support for sustainable finance projects.
While Societe Generale group is already a user of SRTs redeploying capital to sustainability-related lending, this is the first time that BRD resorted to such an instrument.
iulian@romania-insider.com
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