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EBRD backs Raiffeisen’s first synthetic securitisation in Croatia

By Svitlana  Pyrkalo

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  • EBRD supporting RBA in enhancing capital resilience, increasing lending capacity
  • Introducing a new financial instrument, synthetic securitisation, to the Croatian market
  • RBA has committed to financing new green projects

The European Bank for Reconstruction and Development (EBRD) is supporting yet another innovative financial instrument in Croatia by teaming up with Raffeisenbank Austria d.d. (RBA) on the country’s first synthetic securitisation.

The EBRD is providing €25.6 million in credit protection to RBA, the Croatian subsidiary of Austria’s Raiffeisen Bank International AG, in the form of an unfunded financial guarantee. The transaction covers a loan portfolio of performing small and medium-sized enterprises (SMEs) and corporates worth about €366 million.

The securitised loan portfolio, which will remain on RBA’s balance sheet, is split into senior, mezzanine and junior tranches. Under the transaction, the EBRD will assume the credit risk of the mezzanine tranche, while RBA will retain the credit risk of the senior and junior tranches. 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.

Synthetic securitisation is an effective capital optimisation tool, whereby a reduction in capital consumption on the securitised portfolio can be used to unlock and generate new business. The transaction will enable RBA to achieve risk-weighted asset (RWA) relief and redeploy all of the freed-up capacity to the real economy, out of which an amount equivalent to 120 per cent of EBRD guarantee (around €30 million) will be allocated to financing green projects. The project is aligned with the EBRD’s Green Economy Transition (GET) criteria, including renewable energy and energy efficiency financing.

While the synthetic securitisation market has been growing steadily in more advanced EU countries in recent years, it is a new instrument in most of the economies where the EBRD invests, including Croatia. The transaction is an important milestone for the Croatian financial market, as it is the first SRT securitisation completed in the country and is expected to have a very strong signalling effect for the Croatian banking market. 

The transaction builds on the EBRD and RBA’s successful cooperation to date through various innovative financial instruments. In October 2022, the EBRD invested in an RBA sustainability bond, the first issued by a Croatian bank.

RBA, Croatia’s fifth-largest universal bank in terms of assets, has been active in the country’s banking market since 1994, providing a comprehensive range of banking and other financial services to its clients. The bank operates 62 branches in 36 Croatian cities.

To date, the EBRD has invested almost €4.5 billion in Croatia, nearly €300 million of it last year.

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