December 2 (SeeNews) - The International Finance Corporation (IFC) said it invested 110 million euro ($115.9 million) in a senior debt instrument issued by Hungary's OTP Bank that will improve access to climate financing for small and mid-sized enterprises (SME) financing in Bulgaria, Croatia, Romania and Serbia.
The new funding will be channelled to the most underserved SMEs with the aim of providing liquidity that will help the firms reduce greenhouse gas emissions by the equivalent of some 57,800 tonnes of carbon dioxide per year, the IFC said in a statement on Thursday.
Backed by the IFC, OTP Bank's bond issuance is eligible under the minimum requirement for own funds and eligible liabilities (MREL) framework, in line with the European Union's Banking Recovery and Resolution Directive (BRRD).
MREL is devised to ensure that a bank has at all times sufficient capital to ensure it can write down debt or be recapitalised, thus guaranteeing financial stability in case of the need for bailout.
"This project marks an important partnership with a leading regional bank. It will allow IFC to increase on-lending for climate and socially-oriented projects, our top priorities in the region," IFC's vice president for Europe, Latin America and the Caribbean, Alfonso Garcia Mora, said. He added that by supporting OPT's bond issuance, IFC also fulfills its countercyclical role by strengthening market confidence and boosting funding at a time of increased risk aversion towards the region.
OTP aims to reach a corporate green credit portfolio of 1 trillion Hungarian forint ($2.5 billion/2.4 billion euro) by 2025, it said in June. Almost 80% of its total net loan book was invested in EU countries at the time.
OTP is one of the largest banking groups in Central and Southeast Europe, with assets that give it a market share of over 25%.
A member of the World Bank Group, IFC is a global financial development institution which is focused on the private sector in emerging markets.
($ = 0.948782 euro)