First credit risk sharing transaction based on new EU STS standard
mBank and PGGM enter into PLN 9 billion credit risk sharing transaction
The transaction relates to a PLN 9 billion portfolio of loans to large, medium and small Polish corporates. The transaction marks the first partnership with a Polish bank for the Dutch pension investor PGGM, and the first securitization transaction for mBank.
The transaction represents a significant milestone for the Polish market due to its volume - the largest ever securitized portfolio in Central & Eastern Europe - as well as innovation and complexity - the first STS synthetic securitization from Poland. It is also the first transaction in the Polish market executed entirely with a private sector investor and the first trade with a credit-linked note issued directly by the bank.
For mBank, this transaction will assist in delivering on the objectives defined in the strategy of mBank Group for 2021 – 2025. It will support the development of the bank’s corporate banking and retail franchises, which are both poised for future growth.
For PGGM, risk sharing in mBank’s corporate loan portfolio constitutes a unique opportunity to access types of credit risk that are not accessible via public markets or other private markets strategies, and as such the transaction has a highly diversifying value in a portfolio context.
The transaction also adds a new partner bank for the credit risk sharing mandate and marks a further step in the expansion of credit risk sharing transactions as an essential capital management tool for banks. Furthermore, the STS qualification achieved by the transaction testifies to mBank’s desire to implement the highest standards in risk transfer, which PGGM strongly supports.
PGGM has been growing a portfolio of credit risk sharing investments for PFZW, the € 277 billion pension fund for Dutch healthcare workers, since late 2006. It is one of the most experienced and largest investors in this field, and one which has, uniquely, a dedicated allocation to CRS investments.
Luca Paonessa, senior director credit and insurance linked investments at PGGM: “This transaction marks the expansion of our credit risk sharing investments to a new market. It is of great importance to us to be able to do so in partnership with mBank, a dynamic and ESG-conscious organisation with arguably the youngest client demographic in Poland. mBank’s strong organic growth rate in recent years is underpinned by a clear focus on automation and digitalisation of its services”
Karol Prażmo, managing director treasury and investor relations at mBank: “The completed transaction is of strategic significance for the Bank and will support the growth in lending activity across the Bank’s business segments, in line with our recently announced strategy for the years 2021- 2025. As one of the largest and most experienced SRT investors in the market, PGGM is a trusted partner for some of the largest banks globally - and we are proud to be joining forces for their first transaction in the Polish market. Innovation is a core strength of mBank. Together with PGGM – and with the support of our advisors – we have executed a transaction that is not only innovative, but also a landmark for the Polish market.”
UniCredit Bank AG and Clifford Chance acted as advisors to mBank. Linklaters acted as legal advisor to PGGM.
Set up in 1986, mBank is Poland’s fifth largest universal banking group in terms of total assets (at the end of 2021).The bank services approximately 4.5 million retail clients and 31.3 thousand corporate clients in Poland and more than 1.0 million retail clients in Czech Republic and Slovakia. The institution’s offering includes retail, SME, corporate and investment banking as well as other financial services such as leasing, factoring, commercial real estate financing, brokerage, wealth management, distribution of insurance, corporate finance and advisory in the scope of capital markets. Commerzbank is mBank’s strategic shareholder and owns 69.3% of the shares.
PGGM is a not-for-profit cooperative pension fund service provider. As a pension administrator, asset manager and advisor to pension fund boards, it executes its social mandate: to provide for good old-age incomes for 4.4 million participants in the Netherlands. On December 31, 2021 PGGM managed long-term pension capital of EUR 291 billion worldwide. Rooted firmly in the Dutch healthcare sector, PGGM develops innovative provisions for labour market issues in this sector, alone or with strategic partners. Our member organisation PGGM&CO supports 764,000 workers and pensioners with a background in healthcare.
For more information about credit risk sharing, please see https://www.pggm.nl/en/our-services/credit-risk-sharing/
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