Summary of Proposed Investment
Project Number
22138
Company Name
BANCA TRANSILVANIA SA
Date SPI Disclosed
Mar 24, 2004
Country
Romania
Industry
Financial Markets
Projected Board Date
Apr 29, 2004
Status
Completed
Sector
Commercial Banking - Housing Finance
Date Revised SPI Disclosed
Mar 24, 2004
Department
Global Industry, Financial Markets
Environmental Category
C - No Impact
Previous Events
Approved : May 20, 2004
Signed : Jun 8, 2004
Invested : Sep 2, 2004
Project Description
The project consists of up to $34 million in loans to Banca Transilvania (BT, the company or the bank), a regional bank headquartered in Cluj, Romania. Through this financing IFC will assist the bank in expanding its mortgage lending operations and reaching its growth objectives by using the best practice underwriting policies and procedures. The project will also encourage competition among the local banks engaged in mortgage lending and increase clients’ access to longer term financing, making the home ownership more affordable.
Housing finance is a relatively new, but a fast growing banking sector in Romania, whose potential is limited by the availability of long term bank funding. Over the last decade, low quality of the existing housing stock, general housing deficit, and low housing affordability translated into a high demand for mortgage products. With the recent appearance of longer tenor financing, this pent-up demand led to a steep increase in mortgage lending in Romania. Starting from a low $100 million sector wide mortgage portfolio in the end 2002 it is expected to surpass $1 billion by 2005.
The bank started extended housing loans in 2002 and continued with mortgage loans in 2003. BT has been an active participant in the mortgage lending, holding about 12% market share and having about half of its mortgage portfolio in the Transilvania region. The bank’s objective is to double the size of its mortgage portfolio by the end of 2004 and to this end BT requires more term funds. With the term of up to 10 years, the IFC’s financing package would allow Banca Transilvania to increase the tenors of its mortgage offering for up to 15 years.
Housing finance is a relatively new, but a fast growing banking sector in Romania, whose potential is limited by the availability of long term bank funding. Over the last decade, low quality of the existing housing stock, general housing deficit, and low housing affordability translated into a high demand for mortgage products. With the recent appearance of longer tenor financing, this pent-up demand led to a steep increase in mortgage lending in Romania. Starting from a low $100 million sector wide mortgage portfolio in the end 2002 it is expected to surpass $1 billion by 2005.
The bank started extended housing loans in 2002 and continued with mortgage loans in 2003. BT has been an active participant in the mortgage lending, holding about 12% market share and having about half of its mortgage portfolio in the Transilvania region. The bank’s objective is to double the size of its mortgage portfolio by the end of 2004 and to this end BT requires more term funds. With the term of up to 10 years, the IFC’s financing package would allow Banca Transilvania to increase the tenors of its mortgage offering for up to 15 years.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mihaela Nadasan, International Relations Director
8, G Baritiu St.
400027 Cluj-Napoca, Romania
Telephone: +40 264 40 7150
Fax: + 40 264 40 7179
8, G Baritiu St.
400027 Cluj-Napoca, Romania
Telephone: +40 264 40 7150
Fax: + 40 264 40 7179