Investment & Fund Management
involves a unique credit protection mechanism provided by the EIB
Full Credential Description
The European Investment Bank (EIB) Group and Norwegian DNB Bank ASA have launched a pioneering financing initiative, providing NOK 2.2 billion (190 million) to support Nordic businesses in transitioning to greener technologies. This initiative is particularly significant as it marks Norway's first green synthetic securitisation, aimed at facilitating the leasing of zero-emission vehicles and other clean transport technologies across Norway, Sweden, Denmark, and Finland. The financing is designed to assist small and medium-sized enterprises (SMEs) and mid-cap companies in reducing their carbon dioxide emissions, aligning with the European Union's goal of achieving climate neutrality by 2050.
The collaboration, backed by the European Commissions InvestEU programme, involves a unique credit protection mechanism provided by the EIB Group. This structure enhances access to favorable financing terms for climate-related projects, unlocking capital that would otherwise remain inaccessible. The transaction is structured to allow DNB to extend more loans specifically for climate-friendly projects, thereby significantly increasing the availability of funding for sustainable initiatives in the region.
Key features of this transaction include a Significant Risk Transfer mechanism, which is compliant with the criteria for Simple, Transparent, and Standardised securitisations. The EIB Group provides credit protection on a NOK 17.6 billion (1.5 billion) portfolio of SME and small Mid-Cap loans held by DNB, which enables the bank to free up capital for further lending. The European Investment Fund (EIF) plays a crucial role by providing credit risk protection on the mezzanine tranche of NOK 1.1 billion, counter-guaranteed by the EIB, thus ensuring that the EIB Group assumes the risk associated with this tranche.
This innovative financing model not only supports the green transition but also serves as a replicable model for sustainable financing across the Nordic region, reinforcing the broader objectives of the EU Capital Markets Union. The initiative exemplifies the power of collaboration between public and private institutions in driving economic growth while addressing climate change challenges.