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| BT MSME-Mortgage |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26504 |
| Company name | Banca Transilvania S.A. |
| Country | Romania |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | April 11, 2008 |
| Projected board date | May 12, 2008 |
| Date revised SPI disclosed | July 29, 2008 |
| Previous Events | Invested: November 3, 2008
Signed: October 10, 2008
Approved: September 25, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The proposed transaction consists of
- a senior loan of up to EUR30 million equivalent comprising a EUR15 million 10-year tranche for mortgage on-lending and a EUR15 million 7-years MSME tranche and
- a syndicated loan of a much larger amount for general business purposes.
This project aims to work with a locally-owned bank and longstanding partner of IFC, Banca Transilvania (BT) in expanding access to long-term finance for key market segments that remain underserved despite the overall strides made by the Romanian banking sector. These market segments include low and middle income mortgages and the MSME segment, including those located in the frontier regions of Romania. Increasing access to finance in frontier regions, for the above mentioned market segments is key to upgrading the financial infrastructure in Romania which in turn will be crucial in aiding Romania’s integration within the EU, a cornerstone of the World Bank Group strategy. |
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| Project sponsor and major shareholders of project company |
Banca Transilvania is a local Romanian bank, founded in 1993 by a group of local entrepreneurs and listed on the Bucharest Stock Exchange since 1997.
BT is one of the three banks listed on the Bucharest Stock Exchange. The shareholding of the Bank is well distributed among legal entities and individuals. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment is an A Loan for IFC’s own account in the amount of up to EUR30 million and a B Loan in a much larger amount. |
| Location of project and description of site |
| The Bank is headquartered in Cluj-Napoca, Romania, with 500 branches across Romania. Investments can be made throughout Romania. |
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| Anticipated development impact of the project |
IFC’s investment is expected to have a significant developmental impact with positive impacts to the mortgage market, MSME sector and the economy in general besides improving the living standards of Romanian Citizens by indirectly improving also savings and investment rates. This project will:
- support the primary mortgage market in Romania by improving the efficiency of loan origination and standardization of loan files, which would create conditions for the development of secondary mortgage market and potential refinancing mechanisms;
- strengthen home ownership by making available IFC funds as a source to provide financing to consumers residing in underserved geographical areas;
- provide term funding to fast growing Romanian MSMEs that have become a significant engine of economic growth;
- facilitate a better asset-liability management and enabling the Bank to expand its financial intermediation capacity;
- have an important mobilization role, leveraging IFC’s own investment of EUR30 million with a syndicated B Loan. |
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| IFC's expected development contribution |
IFC’s key roles are:
- to provide much needed long term funding of longer maturity than the Bank can access from the market;
- to support and encourage the Bank to expand its activity in frontier regions;
- to catalyze Bank’s entry into microfinance activity;
- to strengthen the partnership with local credit-worthy financial institution bringing the co-operation between the two institutions to the next steps.
It will allow IFC to hold a more meaningful footprint to influence the development of Romanian local banks strengthening their capacity to provide loans to the underserved sectors of the economy. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
The MSME loan component of this project (#26504) will apply the following Applicable Performance Requirements:
- The IFC FI Exclusion List; and
- The applicable Romanian Social and Environmental Laws and regulations.
IFC also reviewed the Bank's existing Social & Environmental Management System (SEMS) and capacity to implement the same as part of the appraisal for Banca Transilvania Subordinated Loan (#25399). It was found that the Bank has a satisfactory SEMS and sufficient capacity to implement the same.
Based on the Applicable Performance Requirements and SEMS and capacity review, the Bank will be required to:
- Continue to implement its SEMS to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements;
- Continue to submit periodic reports to IFC. |
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| For inquiries about the project, contact: |
Mihaela Nadasan, Director, International Relations
8, Baritiu Str, zip code 400027, Cluj-Napoca, Romania
Telephone: 0040 0264/407150
Fax: 0040 0264/407179 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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