33830 - Raiffeisen Bank Romania Bond

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Summary of Investment Information

Project Number

33830

Company Name

RAIFFEISEN BANK SA

Date SPI Disclosed

May 14, 2014

Country

Romania

Region

Europe

Projected Board Date

Apr 3, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Global Industry, Financial Markets

Industry

Financial Markets

Previous Events

Approved : Apr 3, 2014
Signed : May 7, 2014
Invested : May 14, 2014

Sector

Commercial Banking - General

Project Description

The proposed project consists of an IFC senior debt investment of up to RON100 million in a bond to be issued by Raiffeisen Bank S.A. (“RBRO”, or the “Bank”). IFC has no other exposure to the Bank.
RBRO is the sixth largest bank in Romania with total assets of EUR5.7 billion, equity of EUR658 million, and net income of EUR86 million as of the end of September 2013. With 7.2% market share, a national network of 527 branches for approximately 2 million clients, RBRO remained profitable throughout the financial crisis.
RBRO offers a wide range of banking services with a nationwide presence and has a history of about 20 years on the local market. Raiffeisen group’s presence in Romania started in 1994 with a representative office, and in 1998 started to operate as a fully operational subsidiary focused on corporate banking. In 2001, the Raiffeisen group acquired Banca Agricola and in 2002 the acquired bank was merged with the RZB subsidiary in Romania.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.97
Equity

Development Impact

1. Demonstrate the ability of a Romanian bank to attract long-term funding from local and international investors in difficult financial times. IFC''s investment in RBRO in an environment of economic and political volatility is expected to boost investor confidence in the Romanian banking sector.
2. Allow the Bank to become less dependent on funding from its parent, and re-create a local funding mechanism that allows the Bank to grow its lending operations in local currency. Without IFC''s investment, the Bank''s lending operations might be constrained, and the access of the financial sector to capital market as a source of local currency funding might be delayed/ reduced.
3. This investment is expected to be a catalyst for other bond issues to follow.

1. IFC would purchase up to 20% of the bond issue and provide long-term financing, including for SMEs, which is not readily available in the market.
2. IFC would invest in a local currency bond, helping the Bank raise local currency funding at maturities generally not available in the market.
3. IFC would assist the Bank to further develop its ESMS, ensuring compliance with the IFC Exclusion List, applicable environmental and social national laws and regulations, and the IFC Performance Standards for project/ corporate finance activities.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

This project consists of a senior debt investment (bond issue) of up to RON100 million to support Raiffeisen Bank, to be used for general funding purposes. The bank''s portfolio include retail banking, long term small and micro enterprises, long term corporate finance, short term small and micro enterprises, short term corporate finance and short term trade finance where the bank’s highest exposure is to wholesale trade, construction, retail trade and food, beverages and tobacco. The project has been classified as FI-2 according to IFC Environmental and Social Review Procedure. For this particular project, IFC''s applicable requirements will be to ensure that the entire legal entities portfolio of the bank is screened against the IFC Exclusion List, the applicable environmental and social national laws and regulations and in addition against the IFC Performance Standards for project/corporate finance activities. In addition Raiffeisen Bank will comply with the requirements of IFC’s PS2 on Labor and Working conditions.

The main E&S risks and impacts of this investment relate to Raiffeisen Bank having adequate systems and capacity in place to manage the operations being financed in accordance with applicable requirements, including compliance with the IFC’s Exclusion List, applicable environmental and social national laws and regulations and IFC Performance Standards. Raiffeisen Bank has an Environmental and Social Management System (“ESMS”) in place which is applicable to the entire portfolio of the bank and includes compliance with environmental and social national laws and regulations. ESMS will need to be enhanced to be in line with the project’s requirements. The bank’s HR Practices are in general in conformity with IFC''s PS2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Raluca Nicolescu, CFA
Executive Director, Balance Sheet & Portfolio Management/ Treasury Division
Raiffeisen Bank S.A.
Tel: +(4021) 306.12.60
Fax: +(4021) 230.06.84
E-mail: mailto:raluca.nicolescu@raiffeisen.ro

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