Zagreb, Croatia, July 9, 2021—A new IFC investment will help increase access to green housing loans and climate finance while strengthening the local capital market and supporting Croatia's climate goals.
Erste Bank, Zagreb, Croatia. Photo credit: Erste Bank
IFC is investing €75 million in bonds issued by Erste&Steiermärkische Bank d.d. (Erste Bank)—the Croatian subsidiary of Austria's Erste Group Bank AG—to support the bank's housing portfolio, including green housing loans.
IFC's support will allow the bank to finance mortgage borrowers in the country, with 40 percent of the proceeds earmarked for green housing loans. IFC's financing package will further enhance the resilience of the financial sector and promote a dynamic domestic corporate bond market by increasing the diversity in instruments offered by Croatian entities.
"Erste Bank is the most active issuer of bonds among financial institutions in Croatia," said Kresimir Baric, Erste Bank Croatia's Chief Financial Officer. "In accordance with our financing strategy, we have further diversified the sources of funds by issuing bonds. We intend to use the collected funds for our core business. This will help us continue our efforts in building a sustainable and successful roadmap for Erste Bank in Croatia."
The bonds will have features expected to ensure eligibility for the European Union's Minimum Requirement for own funds and Eligible Liabilities (MREL) under the Croatian National Bank's application of the European Bank Recovery and Resolution Directive (BRRD) framework, being only the second issuance of such bonds in Croatia.
"IFC strategy in Croatia aims to help the country leverage private sector financing as it implements its green transition. In line with our strategy, we are glad to partner with Erste Bank to impulse the growth of the climate financing market, green mortgages in particular," said Ary Naïm, IFC's Regional Manager for Central and Southeast Europe. "Further, the newly created market for MREL instruments will bolster the country's financial system, improving its resilience and helping ensure sustainable economic growth."
The World Bank Group's new Climate Change Action Plan aims to deliver record levels of climate finance to developing countries, reduce emissions, strengthen adaptation, and align financial flows with the goals of the Paris Agreement. As part of this plan, IFC will align 85 percent of new direct investments with the objectives of the Paris Agreement starting July 1, 2023, and 100 percent of these investments starting July 1, 2025.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
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About Erste Bank Croatia
Erste&Steiermärkische Bank d.d. (Erste Bank Croatia) originates from the former strong regional banks— Riječka, Bjelovarska, Trgovačka and Čakovečka banka—and has been operating under this name since August 1, 2003. A part of the international Erste Group, one of the leading financial service providers in CEE, Erste Bank is ranked third on the Croatian market in terms of total assets. The Bank has been posting great business results for years, continuously investing in digital development that facilitates innovation and creativity in customer service. By supporting the financial needs of the citizens and financing sound and profitable projects implemented by entrepreneurs and companies contributing to employment growth in the real sector, the Bank adequately supports the development of the entire economy.
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