Romania: Banca Transilvania Green Mortgages Bond Investment

OBJECTIVE

The project objective is to support climate change mitigation in Romania by financing retail purchases of dwellings in residential green buildings.

DESCRIPTION

The proposed project will finance a portfolio of new green mortgages in Romania via an AIIB investment of up to EUR100 million into a privately placed, Tier 2 bond issued by Banca Transilvania S.A. (BT), the largest bank in Romania. The issuance will be under the bank’s Medium-Term Note (MTN) program. Total issuance size is expected to be EUR200 million with IFC financing the remaining EUR100 million.

ENVIRONMENTAL AND SOCIAL INFORMATION

Environmental and Social (ES) Policy, Standards, and Categorization. AIIB’s Environmental and Social Policy, including the Environmental and Social Exclusion List (ESEL) and Environmental and Social Standards (ESSs), is applicable to the Project. The Project is categorized as FI as it is providing loans for individual clients to purchase residential properties in certified Green Buildings.

Environmental, Social, & Governance Management System (ESGMS). BT’s ESGMS has been developed with reference to the IFC performance standard since 2010 and applies to the entire portfolio. BT under its ESGMS will (i) screen the proposed sub-loans against the ES exclusion list; (ii) monitor E&S risks and impacts; (iii) undertake annual sustainability disclosure to stakeholders; and (iv) report to its management accordingly. BT has put in place a sophisticated ESMS, which addresses all requirements of the Bank’s ESF for this E&S category and for the given risk level associated with the sub-projects.

Environmental and Social Characteristics. The proposed investment will support BT in the provision of green mortgage finance to individual clients to purchase green buildings. BT will verify that the building is certified to EU Energy Performance Certificate A level or other equivalent green building certification. The ES risks and impacts are low or minimal.

Gender and Social Inclusion. BT actively promotes diversity and gender inclusion internally. 43 percent of the management committee members are women, and the bank has internal trainings on diversity and inclusion. BT’s retail business is gender and socially inclusive. Green mortgage requirements as set up by BT are non-discriminatory and fully inclusive.

Information Disclosure and Grievance Redress Mechanism (GRM). BT has disclosed its ESGMS overview, annual Sustainability report on its official website and includes provisions for a GRM. BT will require ESG-related complaints can be filed through a designated contact email published on the official website. BT has a designated department to respond to internal and external grievances and keep records. In addition, the information of the Project-affected People’s Mechanism (PPM) of the Bank in Romanian will be disclosed timely in an appropriate manner.

Monitoring and Supervision Arrangements. AIIB will receive a summary report on the performance of the sub-loan portfolio in a format agreed with the BT including the environmental and climate impacts created by the project, and on the performance of the grievance response mechanism.