June 29 (SeeNews) - The European Bank for Reconstruction (EBRD) said it has invested 100 million euro ($116 million) in a subordinated bond issued by Romanian lender Banca Transilvania [BSE:TLV], the second-largest bank in the country, as part of a 285 million euro issuance.
The investment promotes an innovative capital market instrument and encourages other lenders to follow suit, the EBRD said in a press release on Thursday.
The bond is compliant with the European Union’s Capital Requirements Regulation and Capital Requirements Directive IV (commonly referred to as CRR/CRD IV or Basel III). It will count as Tier 2 capital – the secondary component of bank capital after core capital, which includes equity and disclosed reserves.
By investing in a bond that complies with the EU’s latest regulations, the EBRD said is supporting a stronger capital structure for a systemic financial institution.
The instrument will help strengthen and optimise the overall capital structure of Banca Transilvania, EBRD added.
Announced earlier this week, Banca Transilvania's bond issuance is the first subordinated debt issuance listed on the local market in Romania.
It has a ten-year maturity and will be listed on the Bucharest Stock Exchange, BVB.
As of March, Banca Transilvania had a 14% market share in terms of total assets. It is rated BB+ (stable) by Fitch and the EBRD is Banca Transilvania’s largest shareholder, with a current stake of 8.6%.
To date the EBRD has invested close to 8 billion euro in the country in more than 400 projects.
The bank's shares traded 0.84% higher at 2.4 lei as at 1059 CET on Friday on the Bucharest Stock Exchange.
($=0.8647 euro)
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