June 27, 2022 -The first-ever Blue Finance Loan in Central and Eastern Europe will increase funding for Blue Economy projects in Romania. The historic loan of 100 million euros was granted by IFC to Banca Transilvania (BT), the largest bank in the country.
Recent estimates suggest that Romania needs to invest around €15 billion by 2027 to comply with all European Union (EU) requirements related to the water and wastewater sectors, including at least 3 billion euros could be provided by private sector financiers. IFC’s support will help the bank set up a blue finance product to lend to micro, small, and medium-sized enterprises (MSMEs) in line with IFC’s strategy. Guidelines for Blue Finance.
The term blue economy refers to the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, while maintaining the health of ocean ecosystems and water resources. Proceeds from IFC’s investment will be used to fund blue projects in Romania, including sustainable manufacturing, tourism, fishing, sustainable agricultural irrigation and other areas, contributing to ocean and resource sustainability. in fresh water.
“We are delighted to be, through our partnership with IFC, a pioneer in Romania and Central and Eastern Europe in blue economy projects. This is a new area of focus for us, which complements BT’s impact finance portfolio, supports Romania’s alignment with EU water management requirements and standards, as well as increasing water use efficiency in all sectors. Romania is fortunate to have significant water resources and to be a shipping hub. We need to take better care of what we have so that future generations do not suffer because of our actions. We thank IFC for this new partnership which continues what we have already built together“, says Omer Tetik, CEO of Banca Transilvania.
The first blue financing project by a financial institution in the region will help improve access to water in Romania given the country’s high vulnerability to droughts, improve water management practices and waste treatment waste. The loan will also comply with the European Union’s Bank Resolution and Recovery Directive (BRRD), helping the bank meet its regulatory MREL (minimum capital requirement) targets. The concept of MREL was introduced to increase the resilience of banks and ensure that banks have sufficient capacity to absorb losses and recapitalize in the event of a bail-in.
Since 2004, IFC’s partnership with Banca Transilvania has led to 13 investment projects and three advisory projects. As part of the ongoing project, IFC will help the bank understand blue financing opportunities and identify blue projects, possibly helping them develop a blue financing strategy and framework.
“Blue loans offer huge opportunities to strengthen the economy and guarantee the health of Romania’s aquatic and marine ecosystems,“said Ary Naim, IFC’s regional director for Central and Southeastern Europe.”We are confident that IFC’s investment will spark interest in blue finance and inspire other banks to venture into this space, strengthening the resilience of Romania’s banking system and deepening the country’s capital markets.”
IFC has built a solid reputation in the green bond market and is paving the way for launching and scaling blue finance in other regions, committing $400 million in blue financing to date. the world. The ocean economy is expected to double to $3 trillion by 2030, employing 40 million people, compared to 2010. Innovative financing solutions are key to improving ocean and coastal preservation and increasing water resources. clean water, and blue finance has enormous potential to help achieve these goals.