The European Investment Bank (EIB) Group and Norway’s DNB Bank ASA are joining forces in a financing initiative that will provide up to €190 million for a range of businesses in Norway, Sweden, Denmark and Finland to switch to greener technologies.
The financing for small and medium-sized enterprises (SMEs) and mid-capitalisation companies (Mid-Caps) in the four Nordic countries stems from the region’s first green synthetic securitisation targeting 100% climate-friendly investments.
The funds will mainly support the leasing of zero emission vehicles as well as other clean-transport technologies in sectors such as construction.
“This will help companies significantly reduce their carbon-dioxide emissions and bolster the European Union’s goal to become climate neutral by 2050,” said the EIB Group.
“This initiative, backed by the European Commission’s InvestEU programme, involves credit protection provided by the EIB Group and enables increased access to favourable financing terms for climate-related projects, unlocking capital that would otherwise be unavailable for such investments.”
The European Investment Fund (EIF), as part of the EIB Group, is playing a key role in structuring the synthetic securitisation, helping to unlock capital for green projects while reducing the financial risk for DNB.
“We are happy to support DNB in its efforts to accelerate the financing of environmentally sustainable projects and driving the green transition,” said EIF Chief Executive Marjut Falkstedt. “This transaction represents our first securitisation in Norway and our first green securitisation in the region, where we note an increased interest in risk sharing transactions.”
This landmark operation is the first green securitisation in Norway and DNB’s first synthetic securitisation. It also represents the first collaboration of its kind between DNB and the EIB Group.
“The transaction is made possible through a Significant Risk Transfer, designed in line with criteria for Simple, Transparent and Standardised securitisations, whereby 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,” said the EIB.
“This structure frees up capital for DNB, enabling the bank to extend more loans specifically for climate-friendly projects.
“Both the EIB and the EIF are involved in this operation. The EIF provides credit risk protection to DNB on the mezzanine tranche of NOK 1.1 billion, which is then counter-guaranteed by the EIB.
“This structure ensures that the EIB Group assumes the mezzanine tranche risk of the referenced portfolio. Key features of the transaction include synthetic excess spread, a replenishment period, as well as a pro-rata amortisation of both the senior and mezzanine tranches, subject to performance triggers.
“This form of green financing offers businesses a cost-effective solution for funding climate-related projects, supporting both sustainability and growth in the Nordic region.”