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EBRD invests in Banca Transilvania’s subordinated bond

By Olga Rosca

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Romania’s second-largest bank pioneers innovative instrument on local capital market

  • EBRD backs first subordinated bond to be listed on Bucharest Stock Exchange
  • Issuance in line with latest EU regulations
  • Investment seen as new boost for Romania’s capital markets

The EBRD has invested €100 million in a subordinated bond issued by Romania’s Banca Transilvania, the second-largest bank in the country, as part of a €285 million issuance. The bond has 10-year maturity and will be listed on the Bucharest Stock Exchange. The transaction is the first subordinated debt issuance listed on the local market in Romania.

The bond is compliant with the European Union’s Capital Requirements Regulation and Capital Requirements Directive IV (commonly referred to as CRR/CRD IV or Basel III). It will count as Tier 2 capital – the secondary component of bank capital after core capital, which includes equity and disclosed reserves. The instrument will help strengthen and optimise the overall capital structure of Banca Transilvania.

By investing in a bond that complies with the EU’s latest regulations, the EBRD is supporting a stronger capital structure for a systemic financial institution. The investment promotes an innovative capital market instrument and encourages other lenders to follow suit.

Banca Transilvania is a commercial bank incorporated in Romania and providing universal banking services. As of March 2018, Banca Transilvania had a 14 per cent market share in terms of total assets. It is rated BB+ (stable) by Fitch and the EBRD is Banca Transilvania’s largest shareholder, with a current stake of 8.6 per cent.

The EBRD is a leading institutional investor in Romania. To date it has invested close to €8 billion in the country in more than 400 projects. Last year alone, the Bank invested over half a billion euros in Romania. Of this financing, 93 per cent was provided to the private sector.

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