Transilvaniabank

completed

The project consists of up to $34 million in loans to Banca Transilvania (BT, the company or the bank), a regional bank headquartered in Cluj, Romania. Through this financing IFC will assist the bank in expanding its mortgage lending operations and reaching its growth objectives by using the best practice underwriting policies and procedures. The project will also encourage competition among the local banks engaged in mortgage lending and increase clients’ access to longer term financing, making the home ownership more affordable. Housing finance is a relatively new, but a fast growing banking sector in Romania, whose potential is limited by the availability of long term bank funding. Over the last decade, low quality of the existing housing stock, general housing deficit, and low housing affordability translated into a high demand for mortgage products. With the recent appearance of longer tenor financing, this pent-up demand led to a steep increase in mortgage lending in Romania. Starting from a low $100 million sector wide mortgage portfolio in the end 2002 it is expected to surpass $1 billion by 2005. The bank started extended housing loans in 2002 and continued with mortgage loans in 2003. BT has been an active participant in the mortgage lending, holding about 12% market share and having about half of its mortgage portfolio in the Transilvania region. The bank’s objective is to double the size of its mortgage portfolio by the end of 2004 and to this end BT requires more term funds. With the term of up to 10 years, the IFC’s financing package would allow Banca Transilvania to increase the tenors of its mortgage offering for up to 15 years.