EBRD Partners with Bank Millennium for €66 Million Synthetic Securitisation Deal to Boost Lending and Support Green Projects
(IN BRIEF) The European Bank for Reconstruction and Development (EBRD) has signed a €66 million synthetic securitisation deal with Bank Millennium in Poland, marking the EBRD’s second capital relief transaction in the country. This deal will help Bank Millennium strengthen its capital resilience and increase its lending capacity by providing credit protection on a diversified portfolio of SME and corporate loans. The bank has committed to using the asset relief to finance new loans to SMEs and mid-sized companies, with 150% of the EBRD’s guarantee allocated to green projects, in line with the bank’s Green Economy Transition (GET) criteria. The transaction aims to promote the use of synthetic securitisation in Poland, enhancing financial resilience and risk management.
(PRESS RELEASE) LONDON, 14-Jan-2024 — /EuropaWire/ — The European Bank for Reconstruction and Development (EBRD) has signed a synthetic securitisation deal with Bank Millennium in Poland, providing up to €66 million (in Polish zloty equivalent) in credit protection. This is the EBRD’s second capital relief transaction in Poland and is designed to enhance Bank Millennium’s capital resilience while increasing its lending capacity.
Under the terms of the deal, the EBRD is offering credit protection for the mezzanine tranche of a synthetic securitisation. This is structured as an unfunded guarantee on a diversified portfolio of small and medium-sized enterprise (SME) and corporate loan obligations originated by Bank Millennium. This transaction will allow the bank to free up capital by achieving risk-weighted asset relief, thus expanding its capacity to provide new loans to the real economy. Notably, Bank Millennium is incorporating an innovative ramp-up feature, allowing it to increase the size of the securitised portfolio after the deal closes, optimizing both the capital benefits and cost efficiency of the transaction.
In line with its commitment to supporting the Polish economy, Bank Millennium has agreed to use the relief from risk-weighted assets to boost lending to SMEs and mid-cap companies. Additionally, the bank has committed to allocating an amount equal to 150% of the EBRD’s guarantee toward financing green projects, in accordance with the EBRD’s Green Economy Transition (GET) criteria. This includes investments in renewable energy and energy efficiency projects, aiding Poland’s transition to a green economy.
The transaction has been designed to meet the requirements for significant risk transfer (SRT) under the EU’s Capital Requirements Regulation, and it is structured to be eligible for simple, transparent, and standardised (STS) treatment, subject to all necessary approvals. This enhances transparency and aligns with the highest standards in securitisation.
Through this partnership, the EBRD aims to promote the use of synthetic securitisation structures in Poland, helping local banks leverage innovative financial instruments to enhance risk management, capital allocation, and financial resilience. Poland is seen as a promising market for such growth and innovation, and the EBRD’s work in the country aligns with its broader goals of fostering private sector development and promoting a low-carbon economy.
With nearly €15.4 billion invested in Poland, the EBRD continues to be a leading institutional investor in the country, supporting the private sector and SMEs, while advancing the transition to a green economy.
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First published in this link of EuropaWIRE.
