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

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

Blue economy refers to the sustainable use of ocean and marine resources for economic growth, improving livelihoods and jobs, while maintaining the health of ecosystems and water resources. The proceeds of IFC’s investment will be used to finance specific projects in Romania, including sustainable manufacturing, tourism, fisheries, agricultural irrigation, etc., contributing to the sustainability of water resources.

“We are delighted that, through our partnership with IFC, we are a pioneer in Romania and in Central and Eastern Europe when it comes to blue economy projects. This is a new area of interest for us, which complements BT’s impact financing portfolio and supports Romania’s alignment with EU water management requirements and standards, as well as improving water-use efficiency across all sectors. Romania is fortunate to have significant water resources and to be a maritime transport hub. We need to take better care of what we have so that future generations do not suffer because of us. Thank you to IFC for this new partnership, which continues what we have already built together,” said Omer Tetik, CEO, Banca Transilvania.

This blue finance project will help expand access to water in Romania, given the country’s high vulnerability to drought, improve water management practices and treat wastewater. The loan will also comply with the European Union’s Bank Recovery and Resolution Directive (BRRD) and will contribute to BT’s MREL regulatory targets (minimum requirement for own funds). The MREL concept was introduced to enhance banks’ resilience and to ensure banks have sufficient loss-absorption and recapitalization capacity in the event of a bail-in.

Since 2004, the partnership between IFC and Banca Transilvania has involved 13 investment projects and 3 advisory projects. Under the current project, IFC will support the bank in understanding blue finance opportunities, identifying blue projects and helping it develop a strategy and a framework for blue finance.

"Blue loans offer tremendous opportunities to strengthen the economy and to safeguard Romania’s aquatic and marine ecosystems,” said Ary Naïm, IFC’s Regional Manager for Central and South-Eastern Europe. "We are optimistic that IFC’s investment will spark interest in blue finance and attract other banks to venture into this space, boosting the resilience of Romania’s banking system and deepening the country’s capital markets,” he continued.

IFC has a strong track record in the green bond market and is a leader in launching and scaling blue finance in other regions. At present, USD 400 million is committed to blue finance globally. The ocean economy is expected to double to USD 3 trillion by 2030, with 40 million jobs, compared with 2010. Innovative financing solutions are essential to improve the conservation of oceans and coastal areas, as well as to increase clean water resources, and such financing has huge potential to help achieve these objectives.