40824 - DCM Alpha Rom

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Summary of Investment Information

Project Number

40824

Company Name

ALPHA BANK ROMANIA SA

Date SPI Disclosed

May 16, 2019

Country

Romania

Region

Europe

Projected Board Date

Mar 28, 2019

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Dec 7, 2024

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : May 2, 2019
Signed : May 9, 2019
Invested : May 16, 2019

Sector

Commercial Banking - Housing Finance

Project Description

The proposed project consists of an investment of up to EUR50 million in an issuance of mortgage covered bonds by Alpha Bank Romania S.A. (“ABR” or the “Bank”). IFC’s investment will be used to support on-lending to residential mortgage borrowers in Romania. The bonds are expected to be listed in Luxembourg and Bucharest and total expected issuance amount is EUR200 million.

The Bank was established in 1993 and now is the eighth largest bank in the country, with total assets of EUR3.3 billion and equity of EUR367 million as of the end of June 2018. ABR is a universal bank, with a market share of 3.6% by total assets and 7.2% for mortgage loans. It currently employs approximately 2,000 staff and has a national network of 130 branches in Romania.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	56.06
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Housing Finance

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Market Impact: IFC anticipates that the Project will support development of the Romanian mortgage market and capital markets development in issuance of a new covered bond instrument. Project Impact: Romania's mortgage market is the smallest in relative terms in the EU at less than 10% of GDP, and the Project is expected to directly support end customers through new supply of mortgage loans.

Romanian capital markets are relatively under-developed, with the domestic bond market limited in size and scope, and a small number of instruments. The larger foreign-owned banking groups are typically deposit-rich and do not issue bonds, while the growing investment industry (pension funds, insurance) is relatively small. The first issuance of a covered bond is expected to open further possibilities in future as the mortgage market grows. By providing Alpha Bank with funding of up to five-year maturity - which is not readily available in the market - IFC will play an important role in the Bank's efforts to diversify its funding sources.

E&S Category Rationale / Risks and Mitigation

The project consists of an investment of up to EUR50 million in an issuance of mortgage covered bonds by Alpha Bank Romania S.A. ('ABR' or the 'Bank'). IFC's investment will be used to support on-lending to residential mortgage borrowers in Romania. The project has been classified as a Category FI-3 according to IFC's Environmental and Social Review Procedure, since mortgages have low E&S risks by nature. As part of an existing equity investment in parent bank Alpha Bank Greece, Alpha Bank Romania was required to develop an ESMS which currently is being implemented to manage the risks of its entire portfolio. Based on available information, the bank is in compliance with IFC's PS2 on Labor and Working Conditions. The requirements under the existing project will remain unchanged.

Contacts

For Inquiries About the Project, Contact

Alpha Bank Romania S.A.
Periklis Voulgaris
Executive Vice President Wholesale
+40 21 455 7206
pvoulgaris@alphabank.ro
237B, Calea Dorobantilor, Sector 1, 010566, Bucharest, Romania
www.alphabank.ro

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