Romania: Banca Transilvania signs its first synthetic securitisation, supporting new lending to SMEs and mid-caps

This article is published in association with European Investment Bank.

• A synthetic securitisation of RON 2 billion (about €400 million), whereby EIF backed by EIB provides protection on a mezzanine tranche and a senior tranche, reduces credit risk for Banca Transilvania and allows the Romanian bank to release capital allocated to the securitised portfolio.
• The transaction is agreed alongside a commitment by Banca Transilvania to provide new financing of RON 2.64 billion to SMEs with emphasis on environmentally sustainable project.
• Securitisation reinforces its role as a tool facilitating the redeployment of capital for new investments contributing to job creation and a just transition to climate neutrality.

The European Investment Bank Group (EIB Group), comprising the European Investment Bank (EIB) and the European Investment Fund (EIF), has strengthened the long-term co-operation with Banca Transilvania (BT) by approving a synthetic securitisation and new lending commitments.

The landmark transaction is BT’s first securitisation transaction and represents the first capital relief transaction between BT and the EIB Group. The agreement aims to provide capital relief for BT in relation to a portfolio of assets subject to the standardised approach, freeing up lending capacity that will be used to support Romanian small and medium-sized enterprises (SMEs) and mid-caps. The EIF is providing protection on a mezzanine tranche worth more than RON 324 million that in turn is counter-guaranteed by the EIB. The EIF is also offering protection on a senior tranche worth over RON 1.67 billion, 50% of which is in turn counter-guaranteed by the EIB). The structure is derived of a portfolio of micro, SME and corporate loans with a total outstanding balance exceeding RON 2 billion.

“I am glad to see our collaboration with the EIB Group continue with this new project where we accelerate the access to finance for local SMEs, which are one of the pillars of Romanian economy” said BT Chief Executive Officer Ömer Tetik. “Along with consolidating the financing capacity, the EIB has always brought to the table expertise and best practices, abilities that help us to an even better managing of our capital.”

Under the arrangement, BT pledges to supply fresh lending of more than RON 2.64 billion to SMEs and mid-caps over a three-year period. At least 20% of this financing will be allocated to projects aligned with climate action and environmental sustainability, highlighting the commitment of BT and the EIB Group to supporting the transition to a low-carbon economy.

“This transaction with Banca Transilvania underlines our commitment to support Romanian businesses so that they can grow in the best way possible in challenging times. I am glad that Banca Transilvania relied on our proven expertise in their first securitisation transaction, and that we are, together, in position to create new opportunities for the Romanian economy, leveraging securitisation to promote sustainable investments.” said Marjut Falkstedt, EIF Chief Executive.

“The EIB’s participation will create a signalling effect to other international financial institutions and contribute to the development of the capital market in Romania.” said EIB Vice-President Ioannis Tsakiris.

Background information

About the European Investment Bank

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances sound investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.

The EIB Group, which also includes the European Investment Fund (EIF), signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs.

All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support  €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

Approximately half of the EIB’s financing within the European Union is directed towards cohesion regions, where per capita income is lower. This underscores the Bank’s commitment to fostering inclusive growth and the convergence of living standards.

About the European Investment Fund

As of 2 May 2024 the EIF aligns its logo to the EU family, reinforcing its role as a key EU player.

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF contributes to the pursuit of key EU policy objectives such as competitiveness and growth, innovation and digitalisation, social impact, skills and human capital, climate action and environmental sustainability and more.

About Banca Transilvania

Banca Transilvania is the largest bank in Romania and in Southeast Europe. As a universal bank, it covers all customer segments and business lines in the financial sector. It has over 20% market share, 4.3 million customers, over 10,000 employees, online banking solutions and 500 offices in 180 towns. The value of the Banca Transilvania brand reached 686.5 million dollars, on the 252nd place in Brand Finance Banking 500 2024.