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EBRD promotes residential mortgage lending in Bulgaria
€15 million to Bulgarian Post Bank for residents’ access to long-term mortgage finance
Residents in Bulgaria will gain access to long-term financing to buy, build or refurbish residential properties following a €15 million loan from the European Bank for Reconstruction and Development to Bulgarian Post Bank (Postbank).
The 12-year loan, the EBRD’s first residential mortgage loan in Bulgaria, will enable Postbank to provide its clients with long-term mortgage financing, which is currently limited. The loan will also increase competition in the longer-term residential mortgage lending sector.
Rogers LeBaron, Director, Bank Lending at the EBRD, said the loan will help Postbank provide its clients with the opportunity to become homeowners. Bulgaria's mortgage market is still underdeveloped, but it is growing. This loan will improve competition, which will benefit local residents, Mr LeBaron’s added.
The facility will be structured in such a way that the underlying credit assessment procedures, mortgage loan documentation and security will be standardised, which can later facilitate mortgage bond issues and securitisation.
Postbank is one of the top five banks in Bulgaria, with assets of €400 million and equity of nearly €40 million at 2002 year-end. ALICO, a subsidiary of AIG, New York, and Greece’s EFG Eurobank Ergasias, a subsidiary of EFG Group, Geneva, are majority shareholders of the bank.
“Postbank has been traditionally among the leaders at the mortgage lending market in Bulgaria,” said Panagiotis Varelas, Chief Executive Officer of Postbank. “Our mortgage lending program - MY HOME - is designed according to the specific needs of the customers and at the same time fully responding to European standards. With the support of the EBRD we believe we will offer high-quality products to our clients and provide them opportunities for long-term finance,” added Mr Varelas.
The EBRD is the largest investor in Bulgaria, with more than €784 million committed to 76 projects, and has helped mobilise more than €2.4 billion in further investment.
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