47930 - DCM B3T2 MREL 3

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Summary of Investment Information

Project Number

47930

Company Name

RAIFFEISEN BANK SA

Date SPI Disclosed

Oct 18, 2023

Country

Romania

Region

Europe

Projected Board Date

Oct 2, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 18, 2023

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Oct 2, 2023
Signed : Oct 3, 2023
Invested : Oct 12, 2023

Sector

Commercial Banking - General

Project Description

The proposed investment is to invest up to US$80 million equivalent (in Romanian New leu or euro equivalent) for IFC’s own account in Minimum Requirement for Own Funds and Eligible Liabilities (MREL) eligible bonds (senior preferred, SP, and senior non-preferred, SNP) to be issued in one or more tranches, including RBRO’s first-ever EUR-denominated benchmark size international bond issuance. The bonds will be listed on Luxembourg and/or Bucharest stock exchanges and issued under the Bank’s Sustainability Bond Framework, approved in April 2022 which is aligned with the International Capital Market Association’s (ICMA) Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines and, thereby supporting the growth of a sustainable economy in Romania.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	125.0
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
Quasi-Equity	Loans to SME Borrowers
Quasi-Equity	Loans to SME Borrowers
Quasi-Equity	Long Term Loans to Corporates
Quasi-Equity	Housing Loans to Individuals

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

Development Impact

The project is expected to: i) contribute to increasing access to financing for eligible climate and social projects in Romania. ii) contribute to greater market resilience by enhancing the capitalization of systemically important banks toward compliance with regulatory requirements under the European Commission’s bank recovery and resolution directive 2019/879/EU (BRRD 2) by January 2024.

i) IFC will provide long-term financing, helping RBRO to successfully issue its first EUR-denominated international bond issuance under its existing Sustainability Bond Framework. The proceeds from the bonds will finance green and social activities including healthcare, education, basic infrastructure, affordable housing, and employment generation. ii) IFC’s investment in RBRO’s MREL bonds in Romania supports the NBR’s implementation of the MREL regulations for the banking sector in line with the BRRD 2 framework. By investing in RBRO’s MREL-eligible bond program over the period 2023 to 2024, IFC will attract private institutional investors, increasing the likelihood of success for the issuances under this program while at the same time enhancing the resilience of the financial system and the development of the market for MREL instruments in Romania.

E&S Category Rationale / Risks and Mitigation

The project with RBRO involves IFC investments in sustainable bonds issued by the Bank. The proceeds will be used to support the financing of several key areas, which include green buildings, energy efficiency, renewable energy, sustainable agri-finance, clean transport, circular economy, sustainable water management, access to essential services, affordable housing, employment generation and retention through financing of SMEs in underdeveloped regions across Romania. Overall E&S risks associated with these transactions are considered as medium/high and therefore, the project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The Project will not support any activities on IFC Exclusion list, coal-related activities, solar projects, and/or higher risk business activities that may include: a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. Applicable E&S requirements for this Project will be the IFC Exclusion List, Romanian E&S laws and regulations, and the IFC Performance Standards. In addition, RBRO will continue to meet the requirements of IFC's Performance Standard 2 on Labor and Working conditions. Given that it is a market transaction IFC sub-project disclosure requirements will not be triggered.

As an existing IFC client, RBRO established its ESMS. The ESMS is applied to the Bank's entire portfolio and outlines the E&S policy, procedures, tools, monitoring, reporting and responsibilities for E&S risk management of lending activities in line with IFC's applicable E&S requirements. The E&S staff has been assigned and trained. RBRO will continue maintaining proper internal/external capacity, arrange E&S training to the relevant staff, and provide regular reports including implementation records. The external communication mechanism is in place.

Contacts

For Inquiries About the Project, Contact

Raiffeisen Bank S.A.
Romulus Mircea
Executive Director Treasury Department
+40733104293
funding@raiffeisen.ro
246D Floreasca Avenue, Bucharest
www.raiffeisen.ro

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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