The money will be used to finance projects that will boost energy efficiency, slash CO2 emissions and help fight climate change, according to both organisations.
The EIB Group, which consists of the European Investment Bank (EIB) and the European Investment Fund (EIF), has invested €121m in an asset-backed securitisation operation by Santander to fund energy efficiency investments in the Spanish real estate sector, both parties said.
The investment will enable the Spanish lender to mobilise around €163m for sustainable real estate loans.
The agreement gives Santander the opportunity to grant green and sustainable mortgages to individuals looking to build new near zero-emission buildings or to renovate existing residential properties to meet current sustainability standards.
The energy efficiency standards of the new builds and renovation projects will have to match the eligibility requirements of the EIB, which committed around €76m of funding, with the EIF investing around €45m. All projects supported by the EIB Group are in line with the 2015 Paris climate agreement.
Capital relief
The investment will be executed in a single securitisation, with the EIB Group putting up an unfunded guarantee of €121m in a mezzanine tranche, which is a layer of debt between senior and junior tranches. This in turn gives Santander the chance to fund new energy efficiency investments for an amount 1.34 times the size of the guarantee.
The deal was structured in such as way that it gives Santander “capital relief” on a portfolio of residential mortgages, both parties said.
Last year, the EIB Group committed close to €89bn in new financing to over 900 high-impact projects, all aimed at boosting Europe’s competitiveness and security. This included €12.3bn in new financing for more than 100 high-impact projects in Spain, focused on accelerating the country’s green and digital transition and promoting economic growth.
Santander, one of the biggest banks in the world by market capitalisation, has raised some €220bn in green financing for projects between 2019 and 2030.
