IFC, a member of the World Bank Group, is investing 120 million euros in subordinated bonds issued by Banca Transilvania (BT), Romania’s second-largest bank by assets, to strengthen its capital base and growth, and help deepen the country’s financial markets. IFC is the lead investor in the 10-year maturity bond issuance—the first subordinated debt issuance listed on the Bucharest Stock Exchange, which raised 285 million euros with the participation of other international financial institutions, including the European Bank for Reconstruction and Development, which has invested 100 million euros.
The bond is compliant with the European Union’s Capital Requirements Regulation and Capital Requirements Directive IV, and the first ever Basel 3 Tier 2 instrument on the Romanian market. It will count as Tier 2 capital – the secondary component of bank capital after core capital, which includes equity and disclosed reserves.
“We are delighted with our investors’ confidence and appetite for this transaction, which is a first for the Romanian market, and will help strengthen our development,” said Omer Tetik, BT’s CEO. “The fact they are exclusively high-calibre global players like IFC and EBRD also speaks volumes about the strength of this issuance.”
IFC’s relationship with Banca Transilvania dates back to 2004, when it first extended a senior loan to the bank for mortgage on-lending. Since then, IFC has invested in a series of senior, subordinated, and convertible debt instruments for the bank and has also been a shareholder since 2009. A stronger capital base will help bolster BT’s financial resilience and support its future growth strategy. The EBRD is Banca Transilvania’s largest shareholder, with a current stake of 8.6 per cent.
“Our investment builds on previous successes in 2005 and 2013, when IFC and BT partnered on issuing Romania’s first convertible subordinated bonds, with IFC again the lead investor,” said IFC Regional Head, Financial Institutions Group for Europe, Middle East and North Africa Manuel Reyes Retana. “We hope this will test the market and pave the way for similar issuances to help deepen Romania’s capital markets.”