IFC and Varde allot EUR 450 million to buying up bad loans in CEE countries

The International Finance Corporation (IFC) plans to invest up to EUR 100 million to buy up nonperforming loans in Central and Eastern Europe, working alongside Varde Partners LP, a specialized distressed debt and asset firm. The proposed co-investment project, which could see up to EUR 450 million invested, aims to help local economies recover from the crisis by addressing the problem of bad debts and troubled assets.

The project aims to ensure that banks in these emerging markets are able to continue to provide financing to businesses and credit to consumers, boosting economic activity and creating more jobs. The project will also contribute to developing a transparent market for distressed assets, improving market efficiency, according to the IFC.

“Eastern Europe is one of the regions most severely affected by the financial crisis, leading to a dramatic increase in bad bank loans. By investing in these bad loans, we can help banks redeploy their assets back into the economy, giving a boost to economic recovery and job creation,” said Lars Thunell, IFC executive vice-president and CEO.

So far, none of the local or foreign lenders working in Romania has made public the volume of their toxic assets.

Corina Saceanu

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