EBRD invests in debut issue of green bonds by a Greek bank

By Olga Aristeidou

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The EBRD is investing €50 million in the first senior preferred (SP) green bond issuance by the National Bank of Greece (NBG), combining support for capital market development and for the green economy in Greece.

  • EBRD invests €50 million in NBG’s first green bond issuance
  • Total volume of issuance is 500 million
  • First senior preferred green bond issued by a Greek bank

The EBRD is investing €50 million in the first senior preferred (SP) green bond issuance by the National Bank of Greece (NBG), combining support for capital market development and for the green economy in Greece. The total volume of the issuance was €500 million.

It is the first green bond issuance by a Greek bank and the first SP instrument to be issued by a Greek financial institution. The bond will be aligned with the International Capital Market Association’s (ICMA) Green Bond Principles, which recommend transparency and disclosure, and promote integrity in the development of the Green Bond market by clarifying the approach for the issuance of a Green Bond.

The EBRD investment will be used to finance green projects such as wind energy and solar energy in line with NBG’s Green Bond Framework.

The funds are also expected to help the resilience of NBG by supporting the gradual build-up of its minimum required own funds and eligible liabilities (MREL) in an environment adversely impacted by the Covid-19 pandemic, as well as by helping to diversify its funding sources.

The EBRD’s investment contributes to the country’s capital market development by supporting the introduction of new capital market instruments for Greek banks: senior preferred (SP) and green bonds.

Green bonds – whose proceeds go exclusively to projects with clear environmental benefits – have gained global recognition for enabling debt issuers to finance projects that transition their business towards greater environmental sustainability, while at the same time attracting a stable investor base dedicated to sustainability.  

MREL – an EU wide framework, was introduced as part of the EU Bank Recovery and Resolution Directive, requiring European banks to build up minimum funds and liabilities. The latter include among other instruments SP bonds.

NBG is among the largest banks in the country and a long-standing partner of the EBRD.

Andreea Moraru, EBRD’s Regional Head of Greece and Cyprus, said: “This is an important and innovative transaction strengthening Greece’s capital market, and at the same time supporting the country’s banking sector and green economy transition. I believe that the EBRD’s contribution will have a significant demonstration effect for other Greek banks and the overall Greek market in promoting green finance and international standards.”

Pavlos Mylonas, NBG CEO, said: “With this landmark transaction, NBG demonstrates its firm commitment to support the green economy and reiterates its strategic direction as the Bank for Energy. The financing of projects in the energy sector, and above all in renewable energy where we hold a 40 per cent market share, is one of our key strategic goals, as we target financing of €3 billion over the next three years.

The EBRD started investing in Greece on a temporary basis in 2015 to support the country’s economic recovery. To date, the Bank has invested over €3.9 billion in more than 65 projects in the corporate, financial, energy and infrastructure sectors of the Greek economy.

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