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EBRD invests in first local currency bond issue by Romania’s Garanti Bank

By Olga Rosca

The European Bank for Reconstruction and Development (EBRD) is continuing to support the development of Romania’s capital markets with an investment in Garanti Bank S.A.’s first local currency bond.

The EBRD subscribed to 15% per cent of the Romanian bank’s RON 300 million (€68 million equivalent) offer. The bonds to be listed on the Bucharest Stock Exchange have a five-year maturity and have been placed primarily with local institutional investors.

This type of financing will enable Garanti Bank to expand and diversify its investor base and sources of finance, consolidating its funding structure and thereby enabling the bank to lend more, particularly in local currency.

EBRD Director for EU Banks in the Financial Institutions team, Sylvia Gansser-Potts, said: “We are pleased to be among the supporters of Garanti Bank’s debut local currency bond issue. This investment also marks the beginning of a new relationship between the EBRD and Romania’s Garanti Bank, building on the strong cooperation we have developed with its parent Turkiye Garanti Bankasi.”

Garanti Bank S.A. is a fast-growing institution, currently ranked 12th out of 40 banks active on the Romanian market. It is wholly owned by Turkiye Garanti Bankasi, Turkey’s second-largest private bank and one of the EBRD’s main partners in Turkey.

“Having a strong partner such as the EBRD, one of the most important financial supporters in Romania and in Europe, adds value to our efforts to better serve the local banking market. EBRD’s vote of confidence proves that we are a solid choice for any investor and we are happy to continue the successful collaboration started with our parent bank in Turkey,” commented Ufuk Tandogan, CEO of Garanti Group Romania.

This EBRD investment is the fourth local currency bond issue under the EBRD’s Financial Institutions Bond Market Framework for Romania, a €150 million programme launched in June 2013 to back medium- to long-term bonds issued by the country’s financial institutions.

The Framework contributes to the development of the corporate bond market in Romania by supporting successful non-sovereign bonds in the financial institutions sector. The programme is in line with the Local Currency and Local Capital Markets Development Initiative launched by the EBRD in May 2010 with the aim of supporting reforms and policies in the Bank’s countries of operations that encourage increased use of local currency as well as the development of local capital markets.

Since the start of its operations in the country, the EBRD has invested approximately €6.7 billion across 360 projects in Romania. The Bank has further mobilised over €14 billion for these ventures from other sources of financing.

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