The first blue funding supported by IFC supports the sustainable use of water in Romania. €100 million for Banca Transilvania

June 27, 2022 - The first financing in Central and Eastern Europe for blue loans will support blue economy projects in Romania. The loan of 100 million euros was granted by IFC to Banca Transilvania.

Romania must invest approximately 15 billion euros by 2027 to comply with all EU requirements regarding the water and wastewater sector, of which at least 3 billion euros could be provided by private sector financiers. IFC's support will help Banca Transilvania launch a blue financing product for loans for micro, small and medium-sized enterprises, in line with IFC's approach to blue finance.

The blue economy refers to the sustainable use of ocean and maritime resources for economic growth, improving livelihoods and jobs, while maintaining the health of ecosystems and water resources. The funds from IFC's investment will be used to finance specific projects in Romania, including in the field of sustainable production, tourism, fisheries, agricultural irrigation, etc., with a contribution to the sustainability of water resources.

"We are delighted to be, through our partnership with IFC, a pioneer in Romania and Central and Eastern Europe in terms of blue economy projects. This is a new area of interest for us, which complements BT's portfolio of impactful financing and supports Romania's alignment with EU water management requirements and standards, as well as increasing the efficiency of water use in all sectors. Romania is lucky to have large water resources and to be a shipping hub. We need to take better care of what we have so that future generations don't suffer because of us. We thank IFC for this new partnership, which continues what we have already built together", says Omer Tetik, CEO Banca Transilvania.

This blue financing project will contribute to increasing access to water in Romania, given the country's high vulnerability to drought, to improving water management practices, respectively to wastewater treatment. The loan will also comply with the European Union's Bank Resolution and Recovery Directive (BRRD) and will contribute to achieving BT's MREL (Minimum Own Funds Requirement) regulatory objectives. The MREL concept was introduced to increase the resilience of banks and to ensure that banks have sufficient loss absorption and recapitalisation capacity in the event of a bail-in.

Since 2004, the partnership between IFC and Banca Transilvania has meant 13 investment projects and 3 consultancy projects. Under the current project, IFC will support the bank to understand blue financing opportunities, identify blue projects and help it develop a strategy and a framework for blue financing.

"Blue loans offer extraordinary opportunities to strengthen the economy and ensure the health of aquatic and marine ecosystems in Romania," says Ary Naïm, IFC Regional Manager for Central and South Eastern Europe. "We are optimistic that ifc's investment will incite the interest in blue financing and will attract other banks to venture into this space, increasing the resilience of the Romanian banking system and deepening the country's capital markets," he continued.

IFC has a track record in the green bond market and is a leader in launching and expanding blue finance in other regions. Currently, $400 million is being hired for global blue finance . The ocean economy is expected to double to $3 trillion by 2030, with 40 million employees compared to 2010. Innovative financing solutions are essential for improving the conservation of oceans and coastal areas, but also for increasing clean water resources, and such funding has huge potential to contribute to the achievement of these objectives.