Budapest, Monday 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
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
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,
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.