With the successful placement of senior non-preferred bonds for RON 600 million, around €125 million equivalent, Romania’s second largest lender is taking a big step towards compliance with new EU regulations.
The seven-year bonds will be listed on the Bucharest Stock Exchange, and will be the first time that BCR has tapped into the local capital market with an issuance denominated in Romanian lei in the past 13 years.
It is also the first issuance of senior non-preferred debt in Romania and in central and eastern Europe, following the implementation of the EU Bank Recovery and Resolution Directive, which has been designed to make banking systems more robust.
This would allow the bonds to qualify for minimum requirements for own funds and eligible liabilities (MREL), to be set by the National Bank of Romania for BCR.
The issuance conveys the fact that Romania’s capital markets have the ability to raise such funds. The EBRD’s participation has provided comfort to other market players and helped mobilise other investors.
Lucyna Stanczak-Wuczynska, EBRD Director for EU Banks, said: “The EBRD will continue to support the development of Romanian capital markets and is encouraging other local banks to make use of senior non-preferred bonds and other long-term capital market issuances. Such instruments help banks align themselves with regulatory requirements, diversify their funding structure and secure long-term funds to support lending growth and stronger financial intermediation in the country.”
Sergiu Manea, CEO of Banca Comerciala Romana added: “The bond issue reflects our confidence in the local market, but also our good relationship with institutional investors, including the EBRD, one of our long lasting partners. The diversification of our sources of finance has long been in our development strategy. Moreover, we strongly believe that our early action will contribute to further developing the capital market in Romania.”
BCR is Romania’s second-largest bank and is a systemically important financial institution, owned by Erste Bank Group.
The EBRD’s funds will be used by BCR to finance investments in the green economy, such as energy efficiency and renewable projects.
Developing and strengthening local capital markets is one of the EBRD’s priorities in Romania. The EBRD is a leading institutional investor in Romania and to date has invested over €8.3 billion in the country, primarily in the private sector.