IFC and Santander Bank Polska enter into cooperation to finance climate projects and support green transformation in Poland
The International Finance Corporation (IFC), part of the World Bank Group, and Santander Bank Polska are entering into a collaboration aimed at increasing access to climate finance for projects in Poland and supporting the development of the Polish economy after the COVID-19 pandemic.
Through a first-of-its-kind climate risk mitigation transaction in developing economies, IFC will support Santander Bank Polska in scaling up financing for green projects and activities aimed at achieving Poland’s climate goals. Santander Corporate & Investment Banking acted as sole intermediary in the transaction.
As part of the cooperation, the IFC will provide Santander Bank Polska with a guarantee worth up to USD 120 million to cover potential credit losses on the consumer loan portfolio equivalent to USD 730 million on the bank’s balance sheet. Santander Bank Polska will use the capital released by the IFC guarantee to finance a minimum of USD 600 million for climate projects.
This is an example of a so-called synthetic risk transfer (SRT) transaction, whereby banks buy collateral for a designated loan portfolio from investors, reducing the risk weight assigned to it, which allows them to release capital and use it for further loans.
It is also one of the first SRT transactions in developing economies. It will make transactions of this type more popular among Polish investors. At the same time, it will increase financing for climate change projects, which are crucial in the context of Poland’s green transition.
Thanks to this transaction, we will be able to share the risk of part of our portfolio with IFC and release capital to finance sustainable projects. IFC is an important partner for us in achieving both our capital targets and our responsible banking strategy
We have previously arranged an SRT transaction in another market in collaboration with the IFC and we are very pleased that our cooperation will now extend to Poland. This is another important event for Santander Group's large-scale SRT programme
The capital released through IFC support will allow Santander Bank Polska to finance green investments particularly in the areas of renewable energy sources, water management, energy efficiency and green construction.
IFC is a pioneer in financing projects to prevent climate change. The SRT transaction in partnership with Santander Bank Polska is another important step on this path. We are very pleased that this transaction will help Poland meet its climate targets and contribute to its post-pandemic recovery
IFC has been working with Santander Bank Polska for many years. The first joint transaction was a EUR 150 million loan granted to the bank’s leasing company to finance investments made by women-owned businesses. A year later, the bank organised in partnership with IFC the first issue of USD 150 million worth of green subordinated bonds in Poland. The synthetic securitisation completed this year is the fourth transaction of this kind at Santander Bank Polska.