Submitted by: International Finance Corporation
Posted: Feb 12, 2007 – 08:36 AM EST
BUDAPEST- February 12, 2007 – IFC, the private sector arm of the World Bank Group, and Raiffeisen Bank Hungary reached a milestone in energy efficiency financing with the renovation of 300 apartment blocks in Hungary. Since February 2006, IFC and Raiffeisen’s program has offered specialized packages to upgrade windows, insulation, and heating networks for these large-scale buildings. A year later, the program has supported the renovation of more than 18,000 flats, improving living conditions for more than 50,000 people.
Thousands of apartment blocks were built across Eastern and Central Europe, including Hungary, during the past decades. Many of these buildings now critically need renovation. Improvements they need include reducing energy consumption, which can also yield financial and environmental benefits. In less than a year, Raiffeisen and IFC have made 300 energy efficiency loans to Hungarian apartment owners, with a total investment volume of more than $60 million. Together the energy upgrades have reduced emissions of carbon dioxide by 18,000 tonnes per year.
Rachel Kyte, IFC Director for Environment and Social Development, said, “Banks’ initial reluctance to invest in housing block renovation came from the lack of credit history, collateral, and legal designation that characterizes these mostly cooperatively owned buildings. Most of them have no assets, no security, and no payment history. Working with Raiffeisen, we have been able to develop a credit structure anchored in the realization that repayment would come mostly from energy savings, and that renovation would raise the buildings’ value. The result is a clear win for all. Banks in Hungary have found a new way to expand their business, inhabitants of the housing blocks have better heat for less money, and the environment benefits by reducing carbon dioxide and particulate emissions.”
Roland Kerekes, Deputy Director of the Raiffeisen Hungary’s Municipal Department, said, “With IFC’s guarantee backing our loans, we took the leap and found very quickly that investing in energy efficiency is good business and that the repayment rates are very good.”
IFC and Raiffeisen Hungary’s cooperation in the renovation of housing blocks dates from 2002. It has led to the highly successful energy efficiency product that is now addressing the needs of this previously neglected portion of the economy.
Since 1997, IFC has been actively supporting the financing of energy efficiency improvements in multiple sectors through specialized pilot facilities, providing guarantees and advisory services to local banks. IFC, working in partnership with local banks, has invested its own funds together with funds from the Global Environment Facility and donor countries to help develop and implement special financial products that target energy efficiency in several different sectors. These products have often been the first of their kind in their respective markets, providing access to a largely untapped niche market segment with good growth and profitability prospects.
The housing finance experience with Raiffeisen is one example of IFC’s energy efficiency work. Following the success of its program in Hungary, IFC is now looking to use its energy efficiency lending experience in other markets that have similar needs to renovate housing blocks, including the Czech Republic, Latvia, Lithuania, and Slovakia.
About Raiffeisen Bank Hungary
Raiffeisen Bank Hungary is part of the International Raiffeisen Group and is owned by Raiffeisen RBHU Holding GmbH. Raiffeisen is the largest bank group in Austria and operates, in 16 different markets, one of the leading networks of affiliated banks and leasing companies in Central and Eastern Europe. This network provides financial services to more than 11.7 million customers through more than 2,775 branch offices.
Raiffeisen Bank Hungary is a significant player in the Hungarian financial sector, providing a full range of financial services to more than 400,000 customers through its 120 branch offices. Its total assets reached HUF 1,568 billion in the third quarter of 2006.
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.
For more information, please contact:
For more from this organization:International Finance Corporation