EBRD and Bank Millennium sign their first joint synthetic securitisation in Poland

The European Bank for Reconstruction and Development (EBRD) is advancing the broader use of innovative financial instruments in Poland by signing a synthetic securitisation deal and a new lending commitment with Bank Millenium. It is the EBRD’s second capital relief transaction in Poland.

The EBRD is providing credit protection of up to €66 million equivalent in Polish zloty (PLN) on the mezzanine tranche of a synthetic securitisation in the form of an unfunded guarantee. The underlying securitised portfolio is a granular portfolio of small and medium-sized enterprises (SMEs) and corporate loan and factoring obligations originated by Bank Millennium.

The transaction enables Bank Millenium, a long-standing partner of the EBRD in Poland, to enhance its capital resilience by achieving risk-weighted asset relief and freeing up lending capacity to the real economy. The structure includes an innovative ramp-up feature, allowing Bank Millenium to increase the securitised portfolio size after closing – its first such transaction. This feature ensures cost efficiency and further optimises the capital benefits of the structure.

Bank Millennium has committed to redeploying the risk-weighted asset relief achieved to new lending to SMEs and mid-caps in the country. An amount equal to 150 per cent of the EBRD’s guarantee will be allocated to new financing for green projects, aligned with the EBRD’s Green Economy Transition (GET) criteria. This includes renewable energy and energy efficiency financing, supporting Poland’s green transition.

The transaction has been structured in such a way as to satisfy the requirements for significant risk transfer (SRT) under the European Union’s Capital Requirements Regulation and to achieve simple, transparent and standardised (STS) eligibility (subject to all customary approvals), promoting transparency and higher transaction standards.

Through its partnership with Bank Millenium, the EBRD seeks to broaden the adoption of the SRT structure, facilitating partner banks in leveraging synthetic securitisation in Poland. As a highly promising market, Poland presents significant opportunities for growth and innovation in this area, positioning the SRT structure as a transformative tool for enhancing risk management, optimising capital allocation and fostering financial resilience.