Alpha Bank to launch EUR 1 bln mortgage bonds in Romania

Newsroom 06/12/2018 | 13:05

The Greek financial group Alpha Bank prepares the launch of the first mortgage bonds program in Romania, according to the bank.

In 2001, Alpha Bank Romania launched its first real estate loan, opening the market of financing for the purchase of housing through bank credit.

The general meeting of shareholders of Alpha Bank Romania approved the implementation of a framework program for mortgage bonds with a maximum ceiling of EUR 1 billion.

According to the bank, mortgage bonds are a common financing solution in the international financial markets, whereby the bank seeks to diversify its sources of funding and lower its average cost, attracting new funds for the development and expansion of its activities.

According to current regulations, these bonds are secured with a portfolio of claims arising from mortgage/real estate investment contracts in progress.

The launch of mortgage bonds on the Romania’s financial market could improve bank’s asset and liability management in the sense of better management of maturities between borrowings and attracted funding sources.

In the same time, these instruments vould lower financing costs for mortgage loans, increase the degree of financial intermediation by attracting external savings and speed up the development of the local capital market.

In the European Union, around 27 percent of mortgages from financial institutions are funded by mortgage bonds, a common solution used by all banking systems in Europe.