EBRD invests in Alpha Bank’s first synthetic securitisation

By Olga Aristeidou

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Strengthening the resilience of the Greek banking sector

  • EBRD supporting Alpha Bank S.A.  in enhancing capital resilience and increase lending capacity
  • Investment will contribute to the establishment of synthetic securitisation as a new instrument in the Greek market
  • Alpha Bank commits to finance new green projects, including renewable energy and energy-efficiency investments

The European Bank for Reconstruction and Development (EBRD) is providing €10 million credit protection to Alpha Bank SA, one of Greece’s four systemic banks, by investing in the mezzanine tranche of a synthetic balance sheet securitisation. The structure consists of a €1.9 billion performing small and medium-sized enterprises (SME) and corporate loans portfolio, originated by Alpha Bank.

The transaction will support Alpha Bank in enhancing its capital resilience by achieving risk-weighted asset relief of around €1.2 billion and will free up lending capacity.

Moreover, Alpha Bank will allocate 150 per cent of the EBRD investment to financing new investments in renewable energy and energy efficiency.

The transaction is an important milestone for the Greek securitisation market, as it is the only synthetic securitisation to be completed with the participation of multiple investors, including an international financial institution, and the first to support Greece’s green economy transition.

Through its participation, the EBRD aims to support the establishment of synthetic securitisation as an alternative, sophisticated instrument in the Greek financial market, the use of which remains limited to date.

The transaction has been structured in such a way as to satisfy the requirements for significant risk transfer (SRT) under the European Union’s (EU) Capital Requirements Regulation and to achieve simple, transparent and standardised (STS) eligibility (subject to all customary approvals), promoting enhanced transparency and higher transaction standards.

The use of synthetic securitisation structures is an effective capital optimisation tool especially in the context of lending expansion, whereby the reduction of capital consumption on the securitised portfolio is used to generate new business. While the synthetic securitisation market has been steadily growing in the more advanced EU countries over the past 10 years, it is a new instrument in most of the economies where the EBRD invests, including Greece.

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 approximately €5.1 billion in more than 85 projects across the corporate, financial, energy and infrastructure sectors.

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